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Indonesia coal mining association raises concerns over government's production targets

The Indonesia Coal Mining Association (APBI) has voiced concerns regarding the government's ambitious coal production target for 2024, which exceeds 900 million tons, fearing it will intensify pressure on coal prices.

Indonesia coal mining association raises concerns over government's production targets

Hendra Sinadia, APBI's Executive Director, expressed surprise at the unexpectedly high target, which escalated from an initial expectation of around 710 million tons to 922.14 million tons. He warned that such a significant increase could further strain prices amidst the current global oversupply.

Sinadia noted that coal prices peaked in 2022 but experienced a downtrend in 2023 due to oversupply, a trend expected to continue until 2025 with a production of 710 million tons. However, he expressed heightened apprehensions with the target surpassing 900 million tons this year.

Despite these concerns, Sinadia acknowledged the government's decision and emphasized the challenges faced by the mining industry in energy transition, including financing difficulties for the coal sector.

He highlighted rising royalties, numerous policies, and delayed export proceeds as burdens on the industry, urging the government to address these concerns to ensure companies' survival, particularly amidst the ongoing energy transition.

Government data revealed that Indonesia's coal production reached a record high of 775 million tons last year, surpassing the 2023 target. Coal exports totaled 518 million tons, with the remaining output allocated for domestic demand.

However, coal export values saw a significant decline of 29.76 percent in January 2024 compared to the same period last year, amounting to $2.41 billion. This decrease was attributed to both volume and price reductions, with a drop in volume of 18.06 percent and a decline in value 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.

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SteelRadar Insight - Sayı 1 (Haziran 2024)

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