Indonesia cuts its 2019 production target to stabilize global coal prices

Recently, an Indonesian official said that in order tostabilize global coal prices, the Indonesian government has lowered its 2019coal production target to 480 million tons. In 2018, Indonesia's coalproduction target is 485 million tons, of which 25% are sold through theDomestic Market Obligation (DMO) program. Bambang Gatot Ariyono, director ofthe Ministry of Energy and Mineral Resources' Indonesian Coal and MineralsDivision, said the Indonesian government had considered a number of factors,including changes in the US dollar exchange rate, before determining productiontargets for this year.

Banbang said that one of the reasons for adjusting the coalproduction target is to increase national income. “The target for loweringproduction is to maintain good coal prices,” he said, adding that thegovernment is likely to adjust production targets again this year. “We willcontinue to track the market. Under normal circumstances, each coal companywill adjust its production target by July at the latest.”

According to data from the Indonesian Ministry of Energy andMineral Resources, as of December 27, 2018, Indonesia has completed 94.02% ofits 2018 production target. Banbang expects that the domestic marketobligations of coal enterprises to sell 25% of coal to the domestic market andthe sales price of not more than 70 US dollars / ton are enough to ensure thestability of Indonesian electricity prices in 2019.