Indonesia’s 1st-Quarter Coal Production Little Changed Even With Price Drop

  • Tuesday, April 15, 2014
  • http://www.thejakartaglobe.com/business/indonesias-1st-half-coal-production-little-changed-even-price-drop/
Indonesia’s coal production by volume in the first quarter remained little changed from the same period last year despite the decline in the coal price, according to the Energy and Mineral Resources Ministry.

“Coal production as of April 10 stood at 110 million [metric] tons. That is already a quarter of our target this year, which is 421 million tons,” said R. Sukhyar, the ministry’s director general of coal and mineral resources, over the weekend.

Coal exports accounted for 74 percent, or 81 million tons, of total coal production, while domestic demand made up the remaining 26.4 percent.

By the end of March of last year, coal production was 105 million tons.

Sukhyar said that the low coal commodity price has hurt production at mining companies.

“Production cost could reach above $25 per ton. If the coal selling price is $19 per ton, then businessmen will have difficulties in producing coal,” he said.

Mining companies, though, would have to be efficient in response to the drop in coal price, said Supriatna Suhala, the executive director at the Indonesian Coal Mining Association (APBI).

“To cover the loss, businessmen will increase production in general,” he said, adding that businessmen would also have to make cuts in expenditure.

In April, coal was selling at about $74 per ton, while the lowest coal selling price was $19 per ton.

The benchmark coal index in Newcastle had dropped 15 percent to $74.55 per ton in the first quarter. Coal peaked in early 2011 at more than $135 a ton, but it has fallen in each of the past three years.

The total amount of coal production in the first quarter this year came from mining companies that hold coal mining licenses [PKP2B] and permits [IUP], said Edi Prasodjo, the coal business director at the Energy Ministry.

“PKP2B [holders] contribute some 75 million tons, and the rest is from IUP [holders],” Edi said.

Additionally, Sukhyar said that the plan to raise the royalty fee on coal to 13.5 percent for coal mining permit holders was still under discussion. The increase will be included in the revised version of the 2012 government regulation related to non-tax state income. Some small coal miners pay as little as 3 percent in royalties.

“We are still discussing it with the APBI. [The royalty increase] should be handled prudently, because the price is dropping. Don’t let the implementation shut down production,” Sukhyar said.

Posted by : admin [ 4/14/2014 10:17:00 PM ]