Coal miners propose higher production next year

Petromindo

Indonesian coal miners have proposed for higher production next year of up to 489 million tons amid renewed optimism driven by rising price of the commodity in recent months.

This is based on production plans submitted by coal miners holding so-called coal contracts of work (or PKP2B) to the Directorate General of Mineral and Coal at the Ministry of Energy and Mineral Resources and production plans of coal miners holding the IUP mining business permits. Of the 489 million tons production target next year, the PKP2B miners account for 311 million tons, according to data from the directorate.

The 2017 coal production plan proposed by the miners is much higher than the government?s target of 413 million tons as set in the Medium Term Development Plan (also known as RPJM).

The coal production target for this year, based on the RPJM, is 419 million tons, but Director General of Mineral and Coal Bambang Gatot Ariyono was quoted as saying by Bisnis Indonesia on Tuesday that realized output this year is likely to exceed the target at 434 million tons.

He acknowledged that the coal production target has often been exceeded as it is difficult to control production by the smaller IUP miners.

Bambang said that coal production tends to move in line with coal price. Coal miners tend to increase production if price increases.

The government coal reference price (or HBA), which is based mostly on international indices, for December 2016 has been set US$101.69 per ton, the highest since May 2012.

Bambang said that the ministry is still evaluating the coal production proposal of the miners. Kontan, however, quoted Bambang as saying the ministry aims to limit production target next year. ?Coal production will be limited,? he said.

Hendra Sinadia, a director at the Indonesian Coal Mining Association (ICMA), said that the higher coal production target is in line with optimism among the coal industry players. ?The high coal production level has already taken into account the interest of various parties including the government which still rely on the coal sector for non-tax state revenue,? he told Bisnis. (*)