Completion of coal price formula delayed

The Ministry of Energy and Mineral Resources has failed to meet an earlier deadline to complete the revision of the government?s coal reference price formula (better known as HBA), Investor Daily reported on Tuesday.

The paper quoted Director for Coal Management and Development at the ministry Adhi Wibowo as saying that the target for completion of the HBA formula is now set for October, from an earlier target of September. ?(But) For October, the current formula will still be used. The revision of the HBA formula has yet to be completed,? he said.

As has been reported previously, the ministry is seeking to revise the HBA formula so that it would no longer be heavily influenced by external factors considering that Indonesia is a major coal exporter and producer of particularly low rank coal.

There will be a number of changes to the HBA formula, Adhi said in August. The first is that the weighting of the indices in the HBA will be revised, increasing the weighting of the Indonesia Coal Index (ICI) from the current 25 percent, and reducing the other indices including Index Platts59 (now 25%), New Castle Export Index (25%), and New Castle Global Coal Index (25%).

The coal calorie benchmark used in the formula, currently 6,322 kcal/kg GAR, will also be revised to better reflect Indonesia?s coal qualities. There are two options: using calorific value of 5,800 kcal/kg or 4,200 kcal/kg. The latter is considered more ideal as it reflects Indonesia?s dominant coal quality: low CV coal.

The ministry sets HBA every month. The HBA for September was set at US$58.21 per ton, down 1.57 percent from $59.14 in August in line with the current declining trend in global coal price.(*)