ICMA proposes production limit to help lift price

The Indonesian Coal Miners Association (ICMA) urged the government to limit coal production in the country to help stabilize and push the price of the commodity higher.

ICMA Chairman Bob Kamandanu told a press conference on Tuesday that as the world?s largest thermal coal exporter, Indonesia could influence the international coal price, which has dropped to as low as US$86-87 per ton amid the current downturn in the global coal market.

He said that members of ICMA, which account for about 80 percent of the country?s coal production, would discuss the proposed production limit, and expects that the government would support it. Hopefully, the production limit could start next year.

He said that he is not concerned with the prospect of other producing countries increasing the supply in the key export markets of China and India, arguing that the other key producing countries are located quite far from these markets, while Australia?s output are mostly high rank coal which are more expensive than Indonesia?s low rank coal output, seen suitable for power plants in the two giant economies.

Bob said that there has been concern over the rising coal production trend in the country despite the current drop in the price of the commodity. As of end of September, production has already reached 300 million tons, of which only 50 million tons were absorbed by the domestic market, compared to full-year output projection of around 400 million tons.

Elsewhere, Bob expects the coal market to start recovery in the middle of 2014 as demand particularly from India and China increases.

Meanwhile, Vice Minister of Energy and Mineral Resources, Susilo Siswoutomo welcomed the production limit proposed by the coal miners, but said that the government would have to first review the plan on how it would affect the country as coal is one of the key economic sectors. (*)