What Does the Indonesian Gov't Want to Do with the Coal Sector?

Bambang Gatot Ariyono, Director General of Coal and Mineral Mining at Indonesia's Energy and Mineral Resources Ministry, says domestic coal consumption is relatively low and therefore Indonesian coal miners are highly dependent on coal exports. He added that the central government would like to see Indonesia's coal production realization falling to 400 million metric tons by 2019.

And considering about 57 percent of the new power plants in the government's ambitious 35,000 MW power program are planned to be coal-fired, it would mean that domestic consumption of coal is set to rise. This would imply that - with the production target at 400 million tons by 2019 - miners' coal exports will have to decline. Through the energy program, the government aims to slow coal shipments from Indonesia gradually until a full stop in 2046, the latest.

Although setting a coal production target every year, the fact is that the Indonesian government's coal production targets are rarely achieved. For example, in 2016 the government set a target of 434 million tons of coal. However, actual coal production (which does not even include illegal coal output) was recorded at 434 million tons last year. For 2017 the government set its coal production target at 413 million tons. However, Bambang Gatot Ariyono says actual coal production could rise up to 470 million tons this year as local miners are enthusiastically producing coal amid the improved coal price environment, while there also have emerged brand new coal mining companies that started - or are set to start - production in 2017.

Read also: Overview & Analysis of Indonesia's Coal Mining Industry

Regarding Indonesia's coal production, export and domestic consumption, the table below shows that results are in accordance with the government's targets in the 2013-2016 period: coal production and exports are gradually declining over this period (although they may rebound in 2017), while domestic coal consumption is gradually rising.

Indonesian Government's Benchmark Thermal Coal Price (HBA):

Month	2012	2013	2014	2015	2016	2017
January	109.29	87.55	81.90	63.84	53.20	86.23
February	111.58	88.35	80.44	62.92	50.92	83.32
March	112.87	90.09	77.01	67.76	51.62	81.90
April	105.61	88.56	74.81	64.48	52.32	82.51
May	102.12	85.33	73.60	61.08	51.20	83.81
June	96.65	84.87	73.64	59.59	51.87	75.46
July	87.56	81.69	72.45	59.16	53.00
August	84.65	76.70	70.29	59.14	58.37
September	86.21	76.89	69.69	58.21	63.93
October	86.04	76.61	67.26	57.39	69.07
November	81.44	78.13	65.70	54.43	84.89
December	81.75	80.31	69.23	53.51	101.69

^{in USD/ton
Source: Ministry of Energy and Mineral Resources}

Indonesian Production, Export, Consumption & Price of Coal:

	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016
Production (in mln tons)	217	240	254	275	353	412	474	458	461	434
Export (in mln tons)	163	191	198	210	287	345	402	382	366	343
Domestic (in mln tons)	61	49	56	65	66	67	72	76	87	91
Price (HBA) (in USD/ton)	n.a	n.a	70.7	91.7	118.4	95.5	82.9	72.6	60.1	61.8

^{Sources: Indonesian Coal Mining Association (APBI) & Ministry of Energy and Mineral Resources}

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