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Tuesday, 15 July 14
INDONESIA'S TOTAL COAL PRODUCTION REACHED ANOTHER HIGH DURING THE FIRST SIX MONTHS; GOVERNMENT EXPECTED TO RAISE ROYALTIES

COALspot.com: Indonesia's total coal production reached 213 million tons during January through June, up by 7.6 percent y-o-y. Coal output in Indonesia, the world's one of the top thermal coal producers and leading exporter, reached 213 million tons during first half this year, up by 7.6 percent compared with 198 million tons over the same period last year,  according to data from the Energy and Mineral Ministry, as reported by the Jakarta post last Saturday.

The figure represents more than half of the government's overall cap for coal production throughout this year at 421 million tons. However, director for coal at Energy and Mineral Ministry said he remained optimistic that the production would not be exceeded government's overall cap.

According to paper, as quoted by the director for coal at Energy and Mineral Ministry, around 75% of total coal produced during the first six months of this year, namely 158 million tons were sold overseas.

Indonesia's coal reserve stand at 31.96 billion tons, of which 8.9 billion are proven, according to figures from the ministry, the paper further said.

Indonesian government is also planning to increase the royalty for coal for IUP holders in near future if coal prices reached above US$ 80/mt. According to media reports, the government is planning to increase the royalty from 3% to 7% for calorific value of coal below 5100 kcal/kg coal, 5% to 9% for coal between 5100 - 6100 kcal/kg coal and 13.5% percent for coal above 6100 kcal/kg.

Indonesian coal miners association was agreeing to increase the royalty, but oppose to increasing the royalty at current situation. According to association coal miners are now struggling due to lower coal prices vs. higher production cost.  According to miners, if government wanted to increase the royalty for coal, then it can introduce the revised royalty if the coal prices are higher than US$ 100 per mt and not above US$ 80 pmt.

It is seemed that, the government is considering the HBA as its bench mark price to decide whether the price of coal has reached US$ 80 or not.

Indonesian coal reference price (HBA) was set at US$ 72.45 per ton this July, which is 11.53 percent lower than the US$ 81.90 per ton set for January this year or 11.31% lower from the same period last year. In the meantime, this July HBA was 42.98% lower than the all time high HBA of US$ 127.05 per ton set for February 2011.

The association has also called on the government to act on illegal coal mining instead of capping production to control coal output from Indonesia. According to the Indonesian coal mining association, illegal mining of around 56 million tons coal of coal in 2012 and the following years contributed to a prolonged oversupply in the global market, which increased stockpiles and, in turn, led to a fall in prices.

Indonesian government is also to regulate the outflow of coal by controlling coal loading ports. Ministry of Energy and Mineral Resources (MEMR) has determined that, 14 ports will be approved as coal loading ports or as the gateway port of export coal soon. Indonesian Coal Mining Association (APBI-ICMA) also supporting government move on regulate coal loading ports as the association believes that, this move will eliminate or reduce illegal coal exports from countries.

In coming months, we can see number of new regulations and restrictions from Ministry of Energy and Mineral Resources to regulate coal production, transportation and export.



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