Indonesia suspends higher coal mining plans for some miners: sources

  • Saturday, October 7, 2023
  • Source:ferro-alloys.com

  • Keywords:Indonesia, coal mining
[Fellow]The company and Indonesian energy and mineral resources ministry could not be reached for comment.

[Ferro-Alloys.com]

The Indonesian government has suspended for the rest of the year the revised production plans -- locally known as RKAB -- of a few thermal coal miners, which are higher than previously estimated, market sources said Sept. 29, a move that could create supply-side issues out of the country.
 
Miners need approval from the government to produce more coal in a year than estimated in their respective annual mining plans submitted at the start of the year. The permission from the government usually comes by this time of year.
 
Coal miner PT Insani Baraperkasa has issued a force majeure notice, saying it will not be able to fulfil its supply commitments until further instruction, contingent on the energy ministry approving its RKAB, according to a notice from the company seen by S&P Global Commodity Insights Sept. 28. As a result, the company will have to refrain from selling the fuel both in the domestic as well as overseas market.
 
The company and Indonesian energy and mineral resources ministry could not be reached for comment.
 
While one more miner confirmed to S&P Global that its approval had been suspended, sources said the situation is the same for at least half a dozen coal miners, while several others had been waiting for the approval of their respective revised RKABs.
 
The issue of supply constraints in Indonesia coincides with rising demand from China and India amid robust domestic requirements. The persistently high demand has also bolstered prices for Asian thermal coal that had been rangebound in the last few months.
 
Platts, part of S&P Global Commodity Insights, assessed the FOB Kalimantan 4,200 kcal/kg GAR price at $57.50/mt on Sept. 29, up from $50/mt at the start of September.
 
Supply crunch expected
 
The mines of PT Insani Baraperkasa are located in Indonesia's East Kalimantan province, producing mainly grades ranging from 4,890-6,500 kcal/kg, according to information available in the company's website. It primarily exports to India, China and South Korea, which constitute over 70% of total overseas sales.
 
"Some miners were heard to have exhausted their initial production quota in September. This might result in a supply shortage in as early as the later half of October," a trader said.
 
An Indonesian miner, which primarily deals with lower-grade coal, said there could be a supply crunch until Dec. of 2 million-3 million mt/month. However, miners which had not exhausted their output target submitted in the initial work plan and budget will be able to produce and sell.
 
Another trader based in Indonesia said several miners were still hoping for the government to approve their RKABs in a few weeks. However, chances seem extremely slim with the latest development coming to light, the trader said.
 
Moreover, some of the mines had to stall loading coal in barges since late September due to technical issues with Indonesia's Minerba One Monitoring System application.
 
The application records real-time data of production and sales activity of minerals and coal through which companies must report their supply activities. However, the issue with the application was temporary and solved within a few weeks, a Singapore-based trader said. (spglobal.com)
  • [Editor:kangmingfei]

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