Government fears coal over production potential

By Thomas Sembiring

The Directorate General of Mineral and Coal at the Ministry of Energy and Mineral Resources is closely monitoring the exploration status of thousands of smaller IUP (mining business permit) coal mines in the country as they have the potential to create over production in the future.

Agung Pribadi, Director for Coal and Mineral Development at the directorate, said at the recent 4th Annual Coal Buyers and Producers Meeting held by Petromindo.com that if over the next five years these mines expanded to production status, it would create a new industry challenge as the country will face an over production problem. Indonesia is seen as the largest exporter of thermal coal for power plants.

?So it?s going to be a big issue if Indonesia is over supplied with coal,? Agung said.

The IUP coal miners are generally smaller compared to the coal miners holding the so-called coal contracts of work or PKP2B, which now accounts for more than 70 percent of the country?s coal production.

Agung said that if half of the 2,000 IUP coal miners entered production stage, assuming each with production volume of 100,000 tons per year, it will produce around 100 million tons of coal per year. ?This will potentially cause an oversupply situation in the market,? he said.

He said therefore that a new regulation is required to help control domestic coal production.

Editing by Reiner Simanjuntak