Jakarta, APBI-ICMA: KONTAN.CO.ID Tuesday, 19 February 2019 reported that the Ministry of Energy and Mineral Resources (ESDM) noted that there was an increase in the realization of coal production in 2018. If the prognosis in January was at 528 million tons , now there is a surge of 20 million tons to 548.58 million tons.
According to the Head of the Communication Bureau for Public Information Services and Cooperation of the Ministry of Energy and Mineral Resources, Agung Pribadi, this is because a number of holders of new mining business licenses (IUPs) report the realization of their production. Agung said that the amount is still possible to increase, although it will not be significant.
"548 (million tons) are data that goes to us, all 20 million tons are all from the regional IUP," Agung told Kontan.co.id, Tuesday (2/19).
The realization of this production increased rapidly compared to the production target stated in the 2018 Work Plan and Budget (RKAB) which amounted to 485 million tons. The accelerated realization of this target occurred after the government in September opened an additional tap for production quota of 100 million tons.
But, the high amount of production also means the abundant supply of Indonesian coal to the world market. As a result, as said by the Executive Director of the Indonesian Coal Mining Association (APBI) Hendra Sinadia, amid sluggish demand it caused pressure on coal prices.
Moreover, the realization of Domestic Market Obligation (DMO) or domestic coal absorption last year only touched 115 million tons. So, assuming the remaining amount is sold in the market, Indonesia's coal exports last year were around 433 million tons.
Meanwhile, according to Hendra, the amount of coal in the global thermal market last year was around 1 billion tons. That is, around 40% of international coal trade comes from Indonesia. "548 million tons is huge, moreover our production affects global coal supply and prices," Hendra said.
Just so you know, the trend of Reference Coal Prices (HBA) has continued to decline since September 2018. At the beginning of 2019, the HBA was opened at US $ 92.41 per ton, and in February, the HBA again dropped to US $ 91.8 per ton .
In this case, Hendra sees that the government and coal business actors are in a dilemma. Because the government needs coal exports as a mainstay to gain foreign exchange.
However, if production continues to be boosted, it can have a negative effect on the market and prices, which in turn can be detrimental to businesses. On the other hand, large companies can do efficiency, but for small-scale companies braking production is a difficult step, because it takes into account investment and optimization of production capacity.
So, continued Hendra, it did not rule out the possibility that the realization of this year's production would return to exceed the set target. "The position is indeed a dilemma, so the government must be careful in addressing the production target," Hendra said.
For information, this year the coal production target listed on the RKAB is at 489.12 million tons. ESDM Ministry Director General of Mineral and Coal Bambang Gatot Ariyono said the determination of the amount had taken into account production quota cuts as sanctions for those who did not fulfill DMO obligations last year.
However, Bambang did not deny that this year, the possibility of opening additional production quotas remained open. This was made possible by taking into account a number of factors, such as reports on the realization of the company's production, if needed to boost exports to boost state revenues.
Bambang said, this could only be seen in June when the revised RKAB was conducted. "Yes, we will see what the realization will be in the first place. Revision is the limit for June," he explained.