Indonesian Coal Mining Potential
Indonesia is one of the largest coal producers and exporters in the world. Most of the thermal coal exported by Indonesia consists of high-to-low quality types based on Anthracite coal standards (GAR 7000 – 8000 and above) to GAR 4600 – GAR 6500, the majority of demand for which comes from China and India. Indonesia currently ranks 9th with around 2.2% of total global coal reserves.
Coal is divided into two main groups; thermal coal (thermal/steaming coal) commonly used as a power plant and metallurgical coal (coking coal or metallurgical coal) usually used as one of the main ingredients in the metallurgical industry. In Indonesia, coal is mainly used as a source of electricity generation, often called thermal coal.
In 2021, Kalimantan dominates national coal production with a total of 373,040,000 MT or 86.78% while the remainder comes from Sumatra with a total export of 56,811,000 MT or 13.22%.
Domestic Market Prospects
The Ministry of Energy and Mineral Resources targets coal production of 694 million tons in 2023. This figure is 4.6% higher than the annual production target of 663 million tons in 2022. The Ministry of Energy and Mineral Resources also guarantees PLN’s supply of 161.2 million tons by including fulfillment obligations in the Mining Company’s Work Plan and Budget, as well as adding supplies to several smelters in Morowali and Halmahera.
Overseas Market Prospects
Until now, foreign markets are still the belle of Indonesian coal companies. More than 80% of domestic coal production is exported overseas. In fact, currently, Indonesia is the largest country in the amount of coal exported abroad.
China Market
China’s coal consumption is the largest in the world. China is industrial-based, so China needs cheap and abundant energy resources in order to produce products that are competitive in terms of price. In 2012, Indonesia was in second place as the largest supplier of coal to China. Namely, 34% of China’s total coal import volume. The first position is occupied by Australia which is able to supply coal as much as 38% of China’s total import volume.
India Market
After China, India is the largest country for Indonesia’s coal export market share. In 2012, India imported 96 million tonnes of Indonesian coal. This amount only lost to China, which imported 115.7 million tonnes of Indonesian coal. For this reason, India is one of the main targets for coal sales by Indonesian coal companies. In 2022, India will replace China as the largest market for Indonesian coal. Demand for coal from India will increase by 55.63%. Data from the Central Statistics Agency (BPS) shows that Indonesia’s coal export volume in 2022 will reach 360.29 million tons. The export volume increased by 4.29% compared to 2021. In value terms, Indonesia’s exports jumped 76.16% to US$ 46.74 billion or the equivalent of Rp. 705 trillion.
Europe Market
Europe has been a large industrial country for a long time, coal has always been a necessity for them since the Industrial Revolution. Based on data from Banchero Costa, coal imports in Europe increased by around 33.8% (yoy) to 116.5 million tonnes throughout 2022, from 87.1 million tonnes in the previous year. Countries such as Germany, Netherlands, Norway, and Poland are the largest coal importers in Europe. This is also influenced by the increase in industrial production in European countries.