Coal Consumption Still Low Despite Growing Production
Indonesia’s coal production continues to grow but consumption in the domestic market remains weak, indicating snail’s pace development of power plants in Southeast Asia’s largest economy.
Total coal production last year was estimated to have reached about 435 million tons, according to figures from the Energy and Mineral Resources Ministry’s mineral and coal directorate general. That compares with national output of 474 million tons booked a year earlier.
Only 17 percent of coal produced last year, or as many as 76 million tons, was distributed to the domestic market, or far below the allocated domestic market obligation of 95.5 million tons, the figures show.
“The low absorption is due to purchase delays on account of power plant development delays. Electricity sector absorption is around 80 percent of the total domestic allocation,” mineral and coal director general R. Sukhyar said.
The mineral and coal office tried last year to maintain production at a manageable level as part of attempts to secure the coal reserves and resources for utilization in the future.
Indonesia is known as a major coal exporter although its reserves account for only around 3 percent of global reserves. Its main market is China and India.
Indonesia’s coal resources reached 28.97 billion tons, according to the Energy and Mineral Resources Ministry’s energy outlook report. The report also estimates that Indonesia’s coal production can only last for the next 50 years with assumptions that its production level remains at the current figure of around 431 million tons and no additional proven reserves are found.
The country’s coal production keeps growing amid declining global coal prices. Indonesia benchmark price, known as HBA, dropped by around 21 percent last year as demand was slower than the pace of supply growth.
Under the government’s strategic long-term plan (RENSTRA), coal production is targeted at 425 million tons this year.
Out of the total, as many as 92 million tons are targeted to be absorbed by the domestic market.
“However, the total output can hit around 460 million tons,” coal director Bambang Tjahjono said.
Higher coal output is expected to result in bigger contributions to the country. Coal has become a major state income contributor, particularly after the country started banning the export of mineral ores in early 2013. Last year, contributions from the mineral and coal sector reached Rp 34 trillion (US$ 2.686 billion), lower than the targeted Rp 39 trillion.
“The low absorption is due to purchase delays on account of power plant development delays. Electricity sector absorption is around 80 percent of the total domestic allocation.” – See more at: http://www.thejakartapost.com/news/2015/01/07/coal-consumption-still-low-despite-growing-production.html#sthash.MNhhPjSt.dpuf