Coal Mining Sector Indonesia: Earlier Talks about Extension of Contracts

Indonesia's Energy and Mineral Resources Ministry plans to allow holders of long-standing Coal Contracts of Work (Perjanjian Karya Pengusahaan Pertambangan Batubara, or PKP2B) to request for an extension of its mining activities five years before their existing contracts expire (PKP2B).

However, the extension will also mean that PKP2B-holders, which are mostly the established larger players in Indonesia's mining sector, see their PKP2B contracts being replaced with the Special Mining Business License (in Indonesian: Izin Usaha Pertambangan Khusus, or IUPK). This is in line with the 2009 Mining Law (Law No. 4/2009 on Mineral and Coal Mining) that introduced the Mining Business License (IUP) and IUPK as the new legal vehicles in the mining industry.

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

Month	2017	2018
January	86.23↓	95.54↑
February	83.32↓	100.69↑
March	81.90↓	101.86↑
April	82.51↑	94.75↓
May	83.81↑	89.53↓
June	75.46↓	96.61↑
July	78.95↑	104.65↑
August	83.97↑	107.83↑
September	92.03↑	104.81↓
October	93.99↑	100.89↓
November	94.84↑	97.90↓
December	94.04↓
Average	85.9↑

 

Month	2012	2013	2014	2015	2016
January	109.29	87.55	81.90	63.84	53.20
February	111.58	88.35	80.44	62.92	50.92
March	112.87	90.09	77.01	67.76	51.62
April	105.61	88.56	74.81	64.48	52.32
May	102.12	85.33	73.60	61.08	51.20
June	96.65	84.87	73.64	59.59	51.87
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
Average	95.5	82.9	72.6	60.1	61.8

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

Indonesian Production, Export, Consumption & Price of Coal:

	2014	2015	2016	2017	2018
Production (in million ton)	458	461	456	461	507¹
Export (in million ton)	382	375	366	364	361¹
Domestic (in million ton)	76	86	90	97	146¹
Price (HBA) (in USD/ton)	72.6	60.1	61.8	85.9	-

 

	2008	2009	2010	2011	2012	2013
Production (in million ton)	240	254	275	353	412	474
Export (in million ton)	191	198	210	287	345	402
Domestic (in million ton)	49	56	65	66	67	72
Price (HBA) (in USD/ton)	n.a	70.7	91.7	118.4	95.5	82.9

^{¹ government target
Sources: Indonesian Coal Mining Association (APBI) & Ministry of Energy and Mineral Resources}

The text above is short summary of the article that is included in the November 2018 edition of our research report. This article discusses:

(1) the planned revision of Indonesian Government Regulation No. 23/2010;
(2) reactions from stakeholders in Indonesia's coal mining industry;
(3) an update on the coal mining industry of Indonesia.

Read the full article in the November 2018 edition of our monthly research report (scheduled to be released in early December 2018). You can purchase this report by sending an email to [email protected] or a WhatsApp (WA) message to the following number: +6287884106944

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