Coal producers asked to reduce production to prop up prices

The Association of Indonesian Coal Producers (APBI) has asked its members to reduce production in order to prop falling coal prices in international market, Bisnis Indonesia reported on Monday.

The association?s secretary general Jeffry Mulyono said in Jakarta over the weekend that the prices of coal in the international market had dropped significantly due to an oversupply particularly from Indonesia.

"The large size of the coal supply from Indonesia has caused a major drop in coal prices in the international market," he was quoted as saying. He said that one of the solution in coping with the falling price was to cut the coal supply from Indonesia, one of the world?s coal major producers.

Jeffry said that if the oversupply continued, the coal prices in the international market would remain under pressure.

According to Bisnis Indonesia?s data, in 2000, the price of coal dropped to US$29,000 per ton from $30,000 per ton, while production rose to 84.50 million tons a year from 73.64 million tons the previous year.

The secretary general of the association of mining experts, Juangga Mangasi, said in Jakarta over the weekend that the oversupply was not the main reason of the falling prices because most of the local coal producers? exports were based on long-term contracts.

He said that the appeal to reduce the production level would be also difficult to meet because most the local coal producers based their production on the contracts.

Meanwhile Noke Kiroyan, the president director of PT Kaltim Prima Coal, said the increase in the supply from China which currently produces about 1 billion of coal per year, had partly resulted in the drop in coal prices in the international market.

"The quality of coal from China is relatively the same with that from Indonesia. Local producers should therefore pay a serious attention to the world?s coal production trend," he warned. (*)