INDONESIA – Coal miners urged to cut output

The Indonesian Coal Mining Association (APBI), has called on the country’s miners to set lower production targets by almost 25% next year in a bid to prop up coal prices, which are taking their toll on everyone involved in the coal industry.

APBI chairman Bob Kamandanu urged coal miners to cut production by 100 million tonnes next year, from more than 400 million tonnes of coal estimated for this year. He said this would ease the pressure on prices.

With approximately 60 million tonnes of Indonesian coal production used for domestic power production and demand increasing, the APBI’s proposed cut would be most severely felt by the coal export industry. While a cut of this magnitude is unlikely, the financial distress amongst Indonesia coal producers is starting to take its toll.

The coal reference price set by the Ministry of Energy and Mineral Resources was at RM228 a tonne in November, down 18% so far this year. The APBI predicts 2014 coal production to decline 3.5% year-on-year to 410 million tonnes.

A new policy implemented on October 1, requires all Indonesian coal miners to obtain a ‘registered exporter’ status from the Trade Ministry to export coal. Bob Kamandanu said the APBI would meet with associations from other coal producing countries to discuss production volumes and measures that may help boost prices.

Energy Ministry mineral and coal director-general R Sukhyar said the price of coal would remain low as China’s economy was experiencing a slowdown and coal producing countries, such as the United States, were experiencing low demand. “We hope that China will see good economic growth,” he said.

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