In Commodity News 09/06/2015
Energy and Mineral Resources Minister Sudirman Said has said the world’s coal market is heading towards a new balance, which will make Indonesia’s national coal industry more efficient.
“Declines in coal prices during the last several years have pushed markets to normalization because what previously occurred were abnormal profits,” he said as quoted by Antara news agency during the 21st Coaltrans Asia conference in Nusa Dua, Bali.
Sudirman said coal prices, which had skyrocketed to above US$100 per ton, had led many industrial players to get large profits. However, the large profits they obtained in a short time had led to bad behavior from coal businesspeople or government officials.
“It has been proven that this condition has led to environmental destruction and corrupt practices in many regions across the country,” said the minister.
He said the current low coal price, around $64 per ton, would force coal producers to carry out internal consolidation.
“This will be a good situation to ‘educate’ companies to be more efficient, adhere to the law and be more committed to carrying out everything with scientific approaches,” said Sudirman.
He said it was proven that with the consolidation, national coal producers could survive. Even if the coal price was low, national coal production continued to increase.
“This shows that a low price does not affect the selling of coal,” he said.
In 2014, the realized non-tax revenues (PNBP) from coal accounted for 81 percent of total realized PNBP from the coal and mineral resources sub-sector, which reached Rp 32.3 trillion ($2.4 billion).
Sudirman said he was optimistic that consolidation efforts would push the development of the domestic coal market, which was in line with the government’s policy of adding power plants with a capacity of 35,000 megawatts.
“Around 60 percent of the additional electricity capacity will be supplied by coal-powered plants,” he said.
The minister said it was hoped that the policy would increase the domestic coal market from between 80-90 million tons to 250 million tons in 2019.
