Two of Indonesian coal minerss, PT Indika Energy Tbk (IDX: INDY) and PT Bayan Resources Tbk (IDC: BYAN), are planning to cut its production target caused the impact of the COVID-19 has affected the economy and global demand - Photo by Bayan Resources

JAKARTA (TheInsiderStories) – Two of Indonesian coal minerss, PT Indika Energy Tbk (IDX: INDY) and PT Bayan Resources Tbk (IDC: BYAN), are planning to cut its production target caused the impact of the COVID-19 has affected the economy and global demand. Initially Indika targets the production could reached 30.95 million tones (MT) of coal.

While, Bayan was announced to adjust the production from 31 MT of coal to 26 MT of coal by the end of the year due to the pandemic. The company assesses that there is a weakening demand for both, export and domestic, that will affect the company’ financial performance.

The management said, the production cuts are also inline with the company’ mining area in Tabang, East Kalimantan, which was forced to stop its operations for 44 days since March 25 to 14, 2020 to limit the spread of virus. Citing the company’ mid-year report, Bayan has produced 12.1 MT of coal in the first half of 2020, down 24.37 percent compared to the same period of last year, which reached 16 MT of coal.

The issuer’ coal sales volume also decreased to only 17.1 MT of coal in the same semester, lower than previous year, which reached 17.8 MT of coal. Last April, the ministry of energy and mineral resources (MEMR) sees the domestic coal demand could fall around 5 percent if the COVID-19 impact hit the global prices prolonged.

This year, the government has targeted 155 million MT of coal sales for domestic market obligation (DMO) ini this year. But, the MEMR is optimistic that all domestic needs will be met from national production, despite a decline in demand as a result of slowing industrial operations due to the global pandemic. Based on the ministry data, the realization of DMO reached 31.53 MT of coal or 20 percent of the 2020′ targets.

Even so, the government continues to ensure that coal demand for various domestic industries can be met from domestic production, even in the midst of a pandemic. This is because coal production is still in accordance with the established plan so that supply is maintained.

The ministry also considering to changes the coal production quota in 2020 to improve the price of coal. The government targeting the quota target of 530 MT of coal, but now the production has exceeded the targets around 550 MT of coal. The ministry has raised the quota of another 60 MT of coal to match the realization of 2019′ production of 610 MT of coal.

Written by Staff Editor, Email: theinsiderstories@gmail.com