Indonesia 2018 coal output target now around 507m tonnes

Indonesia 2018 coal output target now around 507m tonnes

Indonesia has increased its 2018 coal production target to around 507 million tonnes from a previous target of 485 million tonnes, the Energy Ministry said on Wednesday, a move that may add to downward pressure on prices for the fuel.

The country's miners, though, are being conservative about increasing output and may face difficulties due to heavy equipment and mining lamps shortages, said Indonesian Coal Mining Association Executive Director Hendra Sinadia.

"This will definitely impact prices," Sinadia said, referring to prices for coal with an energy content of up to 5,000 kilocalories per kilogram.

The Newcastle weekly index, the Asian benchmark, has declined 6 percent since Aug. 1, and was at $113 a tonne as of Friday.

"From August to September (prices) declined a lot," he said.

The Indonesia Coal Benchmark Price (HBA) was set at $104.81 in September, down from $107.83 a tonne in August, government data showed.

Also, the low calorie coal market is already saturated, he Sinadia said.

As well, weaker demand from key buyer China could dampen Indonesia's hopes of exporting the additional supply, said consulting firm Wood Mackenzie.

"The government's attempt to boost exports is unlikely to meet its desired goals," Woodmac said in a recent research note.

Separately on Wednesday, state-owned electricity utility Perusahaan Listrik Negara (PLN) revised its 2018 coal consumption target down for Southeast Asia's largest economy, amid slower growth.

Indonesia's coal consumption for power by PLN and independent power producers is expected to reach 88.5 million tonnes in 2018, below a 2018 target of 92 million tonnes, PLN coal contract manager Tri Joko told reporters.

But in 2019, PLN expects coal consumption to increase to 96 million tonnes, Joko said.

"There are several PLN and independent power station projects that will come up this year and in 2019," he said, adding that PLN's forecast for economic improvement in Indonesia will mean more coal is required.

Indonesia's coal consumption for power was at 82.2 million tonnes in 2017.