Norman Harsono, Jakarta – The Indonesian Coal Mining Association (APBI) signed on Wednesday a deal with the China Coal Transport and Distribution (CCTD) association to export US$1.46 billion worth of coal to China next year.
The value is low compared to that of realized exports this year, but the APBI said in a joint statement with the Energy and Mineral Resources Ministry on Thursday that it hoped the deal would translate into 200 million tons of coal exports to China in 2021.
"This presents a positive opportunity to realign production levels to the expected projections," said ministry spokesman Agung Pribadi.
The ministry expects Indonesia to export 461 million tons of coal worldwide in 2021 whereby China, as Indonesia's biggest coal buyer, plays a key role in meeting that target.
The ministry in Thursday's statement noted that Indonesian coal exports to the East Asian country reached $4.9 billion up until September this year, a bigger figure than the deal value.
Coal demand collapsed this year, resulting in the Indonesian benchmark coal price plummeting to a five-year low of $49.42 per ton in September, before recovering to $55.71 per ton in November, ministry data show.
Nonetheless, the price remains weaker than the average $77.89 per ton last year with experts predicting prices to remain below 2019 levels throughout next year.
"With this deal, coal miners are optimistic for 2021 even though the global coal market is not expected to recover to 2018-2019 levels," said APBI chairman Pandu Sjahrir.
The deal signing ceremony was attended by several big names in the coal mining industry including PT Adaro Energy, PT Kideco Jaya Agung and PT Toba Bara Sejahtra, as well as Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan.