Vinnilya, Jakarta – The Indonesia Coal Mining Association (APBI) expresses concern over the government's ambitious coal production target exceeding 900 million tons in 2024, fearing it will exacerbate pressure on coal prices.
"Setting such a surprisingly high target was unexpected. Initially, we anticipated around 710 million tons, but it has escalated to 922.14 million tons. This could strain prices amidst the current global oversupply," said Hendra Sinadia, APBI's Executive Director, in a conversation with Beritasatu.com in South Jakarta on Thursday.
Hendra highlighted that coal prices reached their peak in 2022, but a downtrend ensued in 2023 due to oversupply. APBI anticipates this oversupply scenario to persist until 2025, assuming a production of 710 million tons.
"However, surpassing the 900 million tons mark this year heightens our apprehensions," Hendra remarked.
During January-March 2024, the average coal price ranged between $110 (Rp 1.74 million) and $120 per ton, marking a correction from the $300 per ton seen in January 2023.
However, Hendra acknowledges the government's decision. He highlighted the imminent challenges facing the mining industry in energy transition, which pose financing difficulties for the coal sector.
"Rising royalties, numerous policies, and delayed export proceeds burden us. The government must address these concerns to ensure companies' survival, especially amidst the energy transition," emphasized Hendra.
Government data revealed Indonesia's coal production soared to a record high of 775 million tons last year, surpassing the 2023 target of 694.5 million tons. Coal exports totaled 518 million tons, with the remaining output allocated to meet domestic demand.
However, coal export values plummeted by 29.76 percent in January 2024 compared to the same period last year, reaching $2.41 billion. This decline is attributed to both volume and price reductions, with a volume drop of 18.06 percent and a value decline of 19.68 percent.
Amalia Adininggar Widyasanti, Acting Head of the Central Statistics Agency (BPS), attributed the export decrease primarily to plummeting prices in the global market due to abundant supply and decreased natural gas prices.