Indonesian government through Energy and Mineral Resources (EMR) ministry set its August thermal coal reference price at US$72.67 per metric ton - Photo: Special

JAKARTA (TheInsiderStories) – There is a good news for coal miners as the Indonesian government has officially raised the production quota for 2018 by 100 million metric tons (MT) of coal to 585 MT of coal. The initial planned was 485 MT MT of coal from last year 461 MT of coal.

As we know, Indonesia’s President Joko Widodo has canceled a plan to revoke domestic market obligation (DMO) policy for coals on July 31. DMO is a mandate of Law No.4 of 2009 on Minerals and Coal.

Minister of Energy and Mineral Resources (MEMR) Ignasius Jonan said, this decision was taken in a limited meeting with 17 state officials in Bogor Palace. The meeting was aimed to discuss the foreign exchange reserve, of which discussed the continuation of DMO policy for coals, bio diesel and domestic component level.

At the limited meeting on August 14/8, President Widodo provide a number of directives. One of them is by opening up opportunities for additional coal production of 100 million tons. The EMR ministry was then issued Decree No. 1924K/30/MEM/2018 on Amendments to the Determination of Minimum Percentage of Coal Sales in the Interest of the Interior 2018.

Followed the decision, said Bambang Gatot Ariyono, the ministry’s director general of minerals and coal for the MEMR on Monday (20/08), the government decided raised the production quota. The policy is part of a trade-off for a cap price of the commodity purchased domestically by state-owned power producer PT Perusahaan Listrik Negara.

Higher production of coal is expected to bring more foreign exchange revenue from exports, thus helping to stabilize the already volatile Rupiah.

According to Ariyono, up to now, there have been 40 companies that submitted the additional production to the ministry. Ariyono continued, there were already around 25MT of coal of additions submitted, but that was still in the process of approval.

He is still reluctant to specify which companies have proposed additional. “There are 30s, a large company there, there IUP, PKB2B there, but I do not know very well,” said Ariyono.

For information, last year, Indonesian miners produced 461MT of coal, lower than the 477 MT of coal projected in the ministry’s initial estimation. At that year, the DMO consumption only reached 97MT of coal from a projection of 121MT of coal.

The weak domestic consumption of coal due to the failure of steam power plants to meet their operational targets last year. Its reported currently around 2,500 mining permit holders who have just completed feasibility studies or construction of their facilities and are ready to start production.

The country plans to generate 33 percent of its total energy supply from coal by 2025, up from 30 per cent today. Under the government’s national medium term plan, coal production is expected to reach 400MT of coal in 2019, 60 per cent of which will be consumed domestically.

Email: linda.silaen@theinsiderstories.com