Coal Production in Indonesia Little Changed in First Quarter of 2014
Coal production in Indonesia stood at approximately 110 metric tons in the first quarter of 2014, thus little changed from the production volume in the same period last year. Indonesia's Ministry of Energy and Mineral Resources said that - despite the decline in coal prices - the first quarter result implies that a quarter of this year's production target, which is set at 421 million tons, has been achieved. Indonesia is one of the world's top producers and exporters of coal. This fossil fuel accounts for about 85 percent of the country's mining revenues.
Approximately 74 percent of Indonesian coal production in Q1-2014 (81 million metric tons) was exported, the remainder was sold domestically. Coal production in the first quarter of 2013 was 105 million metric tons.
Problematic for the coal industry is the low coal price. The benchmark coal index in Newcastle fell 15 percent to USD $74.55 per ton in the first quarter of 2014, extending its declining trend of the past three years (the coal price had peaked in early 2011 at around USD $135 per ton).
The government's plan to increase domestic coal royalties to 13.5 percent is still being discussed between the government and the Indonesian Coal Mining Association (APBI). If royalties were to be raised now - when coal prices are low - it will be an extra burden on Indonesian coal miners.
Further Reading:
• Overview of Coal Mining in Indonesia; Analysis and Future Perspectives