China announced to lift its import quota for thermal coal by 20 million tones of coal until the end of the year - Photo: Special

JAKARTA (TheInsiderStories) – The reference coal price in June was dropped again to US$52.98 per metric ton (MT) of coal compared to last month was $61.11 per MT of coal, said energy and mineral resources (EMR) ministry today (06/05). The lack of economic movement makes the coal demand market also experienced a decline, especially from India and China.

“Coal stockpiles in India and China are quite high. They are still utilizing their own domestic production,” said the statement.

It said, the reducing coal supply from Indonesia could not be separated from the strong influence of COVID-19 impact, which limited the economic movements around the globe. The ministry said, in the midst of epidemic, there are a tendency for the transition to alternative domestic energy sources and has become the main trigger besides the result of improving China – Australian relations.

The EMR ministry also admitted, the benchmark price has experienced a downward trend since COVID-19 was declared a pandemic by the Word Health Organization in mid-March. Had strengthened at 0.28 percent at $67.08 per MT in March compared to February at $66.89 per MT of coal, then declined to $65.77 per MT in April.

This price will be used directly in the sale and purchase of coal products (spot) for one month at the point of sale for Free on Board on a transport vessel. The ministry 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 MT of coal sales for domestic market obligation (DMO) ini this year. But, the government 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. It said, total national production in the first quarter amounting to 143 million tons. The DMO realization for stated-owned power producer, PT Perusahaan Listrik Negara recorded 25.6 MT of coal.

The domestic coal needs for the general non-electricity sector reached 5.93 MT. This year, the government has set a coal selling price for electricity of $70 per ton in 2020 and the selling price for other industries refers to the Reference Coal Price set by the government every month.

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.

Earlier, director general at the ministry, Bambang Gatot Ariyono, has said the government will delays the submission of Work Plan and Budget for coal producers to be submitted after the first quarter of this year. This plan is regulated in Regulation of the MEMR Number 7 of 2020 concerning the procedures for granting territories, permits and reporting on mining and mineral mining business activities.

The government also considering to changes the coal production quota in 2020 to improve the price of coal in the first semester. Initially, the government targeting the quota target of 530 MT of coal, but now the production has exceeded the figure around 550 MT of coal.

Currently, the ministry raised the quota and give the spaces of another 60 MT of coal tons or 12 percent to match the realization of 2019 production of 610 MT of coal. EMR ministry has urged the coal producer to prioritize the fulfillment of domestic primary energy needs to support the government’ renewable program.

The minister, Arifin Tasrif, also decided to continue the DMO of at least 25 percent of the 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: