Indonesia’s major coal mining producers listed on the Indonesian Stock Exchange, are expected to ramp up production volumes in 2018 amid rising global demand and stronger coal price.

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Indonesia’s majors prepare to ramp up coal production in 2018

Having had their production outputs heavily affected by inclement weather throughout 2017, thus output being naturally curtailed, local coal mining companies are indicating a production revival.

Bumi resources, Indonesia’s biggest coal producer, is expected to produce between 90-96 million tonnes in full-year 2018, up from an estimated production of 84-90 million tons in the preceding year.

Indonesia Investments quotes Dileep Srivastava, Director and Corporate Secretary of Bumi Resources, as saying that this year the outlook is better and the company’s sales are expected to improve on the back of rising production and an estimated 5% growth of the coal price.

Bumi Resources also targets to produce up to 8 million tonnes of high calorie coal in 2018 stemming from its subsidiary Arutmin in which Bumi Resources holds a 70% stake.

Indonesia’s second-largest coal mining company, Adaro Energy, targets to produce 54-56 million tonnes of coal in 2018, up from 51.79 million tonnes in the preceding year. Meanwhile, Delta Dunia Makmur targets to produce 50 million tonnes, up nearly 25% (y/y) from the company’s coal production realisation of 40.2 million tonnes in 2017.

Delta Dunia Makmur set aside US$225 million for its capital expenditure budget in 2018. These funds will be used for the rejuvenation of heavy equipment as well as business expansion.

Indika Energy targets to produce up to 34 million tonnes of coal in 2018, up only slightly from an estimated 33 million tonnes in 2017. But despite this expected modest production growth, the company’s sales are projected to rise significantly as Indika Energy’s ownership in coal-producing unit Kideco Jaya Agung doubled to 91%.

Coal miner Tambang Batubara Bukit Asam targets to produce 25.53 million tonnes of coal, up slightly from 24.06 million tonnes in 2017.

The direction of the coal price remains highly dependent on policies of the Chinese government. According to data from the National Development and Reform Commission (NDRC), China will reduce its mining spots from 10,800 to 7,000 and cut the nation’s coal output up to 800 million tonnes up to 2020, which will boost the price of coal due to limited supply on the world market.

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