JAKARTA (TheInsiderStories) - Senior economic minister, Airlangga Hartarto, sees the absorption of coal for domestic market obligation (DMO) only reach 141 million tons (MT) of coal in this year. The amount representing 90.9 percent of this year’ target of 155 MT of coal. The weakening of coal absorption amid the COVID-19 pandemic became the reason.
But, While, the Indonesian Coal Mining Association have a different projection, the domestic coal absorption will be around 125 MT of coal or only 77.42 percent of 2020′ target. As reported, the government is targeting 70 percent of coal for DMO is allocated for power plants.
Then 10.6 percent for processing and refining needs, 9.4 percent for cement industry, textile and paper factories allocated 6.54 MT of coal and for fertilizer factories of 1.73 MT of coal. State-owned power producer, PT Perusahaan Listrik Negara, as the largest coal absorber in the country, revealed that the existence of large-scale social implementation in several regions has resulted a low electricity load and reducing the coal consumption.
Hartarto also reported, the price of coal had decreased from US$66.89 a MT of coal in February,2020, to $49.2 MT of coal in September, 2020, or down 35.95 percent compared to last year. In addition, coal export, which is targeted to reach 359 MT of coal by the end of 2020, until October only reached 58.81 percent or 232.3 MT of coal.
The ministry of energy and mineral resources (MEMR) has announced that the realization of Indonesian coal exports has fallen sharply by 11 percent until July 2020 caused of the pandemic effect and weak global demands. The minister, Arifin Tasrfin, said that the volume of Indonesian coal exports was recorded 238 MT of coal with a value of $10.13 billion during the first seven month.
In the same period of 2019, the exports reached 266 MT of coal and the values worth of $12.36 billion. He explained, that the demand for coal in the Indonesian market fell 20 percent and South Korea dropped by 15 percent.
“[The decline] is also due to the policies of major coal importer countries such as India and China, which prioritize domestic coal production,” he told on Sept. 14.
The minister emphasized that the COVID-19 outbreak has also resulted in a decline of coal price, global demand, limited access and mobility. as the impact, he said, the realization of national coal production also fell to 362 MT of coal from a year ago reached 409 MT of coal.
MEMR data notes that the realization of coal production in the January – August of 2020 period is equivalent to 66 percent of the national coal production target at 550 MT of coal. Even so, said Tasrifin, his office not changed the outlook for the national coal production until the end of this year.
Currently, the reference of coal price for direct sales for delivery of Free on Board sales at $49.42 a MT of coal. The benchmark level slightly decreased by 1.83 percent compared to the August worth of $50.34 per MT of coal.
When compared with the the same month in 2019, the price amounting to $65.79 a MT of coal and experienced a significant decreased of 24.88 percent. To help the coal producers, Tasrifin has urged the coal producer to prioritize the fulfillment of domestic primary energy needs to support the government’ renewable program.
He also decided to continue the DMO at least 25 percent of the total coal production in 2020. These provisions are contained in Ministerial Decree Number 261 of 2019 concerning Fulfillment of Domestic Coal Needs for 2020.
Written by Staff Editor, Email: theinsiderstories@gmail.com
