Issue 003 | 20 December 2019 IKI Coal Monthly Indonesia

Indonesia Coal Outlook 2020

Forecast Production
Government focus in 2020
n some coal conferences attended by successfully done by the industries and today

I IKI, ESDM always mentions that in

2020 mining industries in Indonesia
will focus on added-values activities
on the commercial stage, as they listed on
the table 1 below.

PT Indeks Komoditas Indonesia (IKI) think

(upgrading) as mandated by the Indonesian
regulation. The same matter also mentioned
by President Jokowi and persuade coal mines
to do added-value activities and claimed that
this matter could support government
programs in solving trade deficit and solve
current account deficit which always
happens every year. President Jokowi
explained coal can be processed to become
dimethyl ether (DME), liquid petroleum gas
(LPG) and petrochemical. President Jokowi
also claim only by doing added-value
activities in nickel industries the trade deficit
together with the current account deficit can
be solved in the next three years.
the government program on added value
probably to attract investor, foreign and
domestic, to invest in coal industries, due to
government expectation of income from the
investment sectors in coal will increase next
year. IKI will review all the-project listed on
the table 1 below at the end of this topic.
In this month's article, IKI will focus on
forecasting Indonesia coal production in
2020 with a comparison between ESDM
production and IKI production in 2020.
IKI forecast based on the current situation
and also review production and demand in
the past.

Table 1. Added Value in Coal

Capacity
No Company Project Product Status
(Mt)
1 PT Bukit Asam Coal gasification Dimetil Eter Plan 0,57
2 PT Bukit Asam Coal Briquette Briquette Commercial 0,02
3 Thriveni Coal Briquette Briquette Commercial 0,08
PT ZJG Resources Tech
Coal Upgrading 4200 GAR Commercial 1
4 Indonesia
5 PT Asiatic Universal Indonesia Coal Upgrading NA Commercial NA
6 PT Borneo Pasifik Global Coal Upgrading NA Commercial NA
7 PT Prima Coal Chemical Coal Upgrading NA Commercial NA
8 PT Kartika Prima Abadi Coal Upgrading NA Commercial NA
Semi coke +
9 PT Megah Energi Khatulistiwa Cokes making Tar Plan 0,65
Source: ESDM presentation Nov 2019

As a support to the president program, Review Coal Production

ESDM also claimed there are some added -
value projects which they think could be
done in coal industries, like coke making,
coal upgrading, briquetting, coal
gasification, coal liquefaction, and coal
slurry. ESDM also claimed that some
projects on the added values have been
In IKI's last coal monthly report we have said
that Directorate General of coal and mineral
of ESDM Bambang Gatot, claimed they have
received production plan of coal mines in
2020 with total production will reach 700 Mt,
but Bambang Gatot claim they will only

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 Issue 003 | 20 December 2019
Chart 1. Indonesia Coal Production (Mt)
Source: ESDM, worked by IKI
approve total production 530 Mt. He also
said limitation in coal production must be
done to secure coal reserve for the future, as
the government predicts with the current
production level, coal reserve will be
depleted in the next 60 years.
IKI has compiled Indonesian coal
production from 2010 – 2019 based upon the
ESDM figure. From the chart 1 above we can
see average growth of production for the last
10 years more than 8%, however the growth
of coal production in the last five years only
around 4%. ESDM try to claim their program
to reduce the growth on production were
successes. From chart 1 above we can see also
ESDM claim coal production in 2014 and
2016 decrease respectively 3.4% and 1.1% y-o-
y. There were no explanations from the
government about this matter, however IKI
predict government reduces coal production
in 2014 & 2016 as they think they price were
decrese.
In the chart 1 above we can see from 2016 -
2018 there were differences (gap) between
total production compare to total export and
domestic. IKI calculated the average
difference (gap) was around 62 Mt and based
in our study over ESDM presentation and
also their monthly production statement
they release in the media, IKI predicts the
same will be happen that ESDM total
production
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IKI Coal Monthly Indonesia
Compare to total export and domestic in
2019 will show difference (gap) around 45
Mt. IKI has tried to ask about this matter to
ESDM, but until today we not get any
explanation.
We can also see coal production share for the
domestic market still low, IKI calculates the
average share for the past ten years only 20%
from total production or below the
government target of 25%. In the latest
conference attended by IKI, Bambang Gatot
claimed that the government's purpose of
setting 25% shares of the production to the
domestic market is to guarantee enough coal
for the industries also to provide buffer for
stock.
In our latest conversation with ESDM, IKI
conclude the government will change its
production target in 2019 as they claimed
that until October 2019, coal production was
around 492.7 Mt which consists of 275 Mt
from CCOW and 217.7 from IUP. However,
IKI couldn’t use this production figure on
our monthly report as we find the differences
around 20 - 23 Mt between ESDM
production numbers compare to their export
and domestic number.
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 Issue 003 | 20 December 2019 IKI Coal Monthly Indonesia

Review Domestic Market Obligation about coal export releases by other

(DMO) ministries, but we unable to find any. IKI has
questioned the same to ESDM but without
ESDM said their DMO target in 2020 around any comment nor reply from them.
155 Mt or increases 21% y-o-y. IKI note ESDM
has jumped their DMO for metallurgy IKI finds this matter as a very interesting
industries (mineral processing) by more case as the government cannot explain their
than 200% y-o-y, meanwhile DMO for power export activities in the past, which will give
plant increase around 13.9%. However, them difficulties to do a forecast of export in
ESDM has decreased DMO for cement the future. Therefore, in the purpose of this
industries by around 10% y-o-y. report, IKI has given export figure which
compiles from our sources as shown on the
As per the table 2 below IKI calculated chart 2 below.
average growth of the DMO since 2014 - 2019
Chart 2. Coal Export (Mt)
are more than 11%, with power plant
consumption accounted around 82% of total
DMO followed by cement and textile
respectively 12% and 2%. IKI also found out
since 2019 ESDM increase its DMO for
metallurgy industries more than 200% y-o-y,
probably because of their perception coal
demand for mineral processing plants like
nickel, copper, bauxite and other minerals
will increase due to completion of smelters.

Source: Various source. worked by IKI

Table 2. ESDM DMO (Mt)

Industries Domestic Market Obligation (Mt)
No
Year 2014 2015 2016 2017 2018 2019*
1 Power Plant 66 70 75,4 83 91 95,7
2 Cement 7,18 10,54 10,54 12 14,86 16,15
3 Textile 1,45 2,2 2,2 0,5 2,76 4,4
4 Pulp and Paper 0,8 0,65 0,65 0,2 3,15 4,9
5 Fertilizer 0,4 1,31 1,31 1 1,41 1,4
6 Briquette 0 0 0,03 0,03 0,01 0,01
7 Metallurgy 0,298 0,39 0,39 0,3 1,75 5,4
Total 76,1 85,1 90,5 97,0 114,9 128,0
Source: ESDM, worked by IKI

Review coal export As per the chart 2 IKI calculates the average
growth of Indonesia export for the last five
ESDM said coal export in 2020 will be around
years around 5%, with big increases were
375 Mt decrease around 6.3% y-o-y but
happened in the last three years. IKI find out
without any explanation. IKI has tried to find
in the last five years almost all Indonesian
ESDM explanation and their comments
coal was export to the Asian continent with
about Indonesian coal export for the past 5
the Indian was the biggest market accounted
years, like they always did in their
27.8%, followed by China 27.7%, South Korea
production and DMO presentation, but until
9.2%, Japan 8.2%, and the Philippines 4.3%.
today we unable to find any official report.
IKI also found out a few Indonesian coals
IKI has tried also to search official reports

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 Issue 003 | 20 December 2019 IKI Coal Monthly Indonesia

also marketed to other continents like
Europe, Australia, and the USA.
What Next?
In every ESDM presentation attended by IKI,
ESDM always said that in 2020 their
production will be likely the same with 2019
production or around 530 Mt consist of 155
Mt for DMO and 375 Mt for export. IKI also
found in Indonesia’s state budget plan for
next year (APBN 2020), the government has
set income from non-tax revenue (royalties)
from mining sector (coal and minerals) only
around IDR 26.02 trillion, or decrease
around 0.5% from 2019. The income based
on the government prediction coal
production in 2020 around 530 Mt, average
Indonesia coal price reference (HBA) US$
90/t and exchange rate (IDR) at the level
14,400/US$.
IKI forecast
IKI think the government target on coal
production in 2020 is too conservative if we
compare to production this year. In the IKI
coal monthly report on October edition, we
have predicted Indonesia coal production in
2019 around 600 Mt consist of 465 Mt for
export and 135 Mt for DMO. IKI found some
indication that the government will consider
this number, our prediction government
production figure in 2019 will be at the level
of 575 – 590 Mt. With total coal production
in 2019 of 600 M, IKI than forecast coal
production in 2020 could increase around
6.7% to 640 Mt, consist of 480 Mt export and
160 Mt for the domestic market.
From the coal supply side, IKI has done mine
by mine production forecast for some big –
medium mines, as we compile on table 3
below. The total growth production of mines
in 2020 around 9% y-o-y, however, we have
reduced further total growth production to
only 6.7% with the assumption production
from South Sumatra, Jambi, and Central
Kalimantan will be reduced due to
infrastructure constrain together with low
prices situation.
From the coal demand side, IKI expects
export next year will be grown around 3%
driven by increasing demand from India and
South East Asia countries. Decrease demand
from South Korea and Thailand expect to
happen as the government of these countries
change their power consumption from coal
to gas. At this moment IKI has put China
demand in 2020 will remain the same as
2019.

Table 3. Mine by Mine Production Forecast (Mt)

No Groups Location 2019 2020 Growth

1 Bumi Resources Kalimantan 85 87.5 2.9%
2 Adaro South Kalimantan 58 56 -3.4%
3 Indika Kalimantan 35.5 37 4.2%
4 Golden Energy Mines Sumatra and Kalimantan 28 35.65 27.3%
5 Berau Coal Kalimantan 32.1 33 2.8%
6 PT Bukit Asam South Sumatra 28.5 30 5.3%
7 ITMG Kalimantan 24 26 8.3%
8 Geo Energy Resources Sumatra and Kalimantan 8 19 137.5%
9 ABM Investama Sumatra and Kalimantan 11.5 13 13.0%
10 Mandiri Inti Perkasa Kalimantan 5.7 6 5.3%
11 Toba Bara Kalimantan 4.6 5 8.7%
12 Resource Alam Kalimantan 3.51 4.5 28.2%
13 Harum Kalimantan 3.8 4 5.3%
14 Atlas Resources Sumatra and Kalimantan 1.7 3 76.5%
Total 329.91 359.65 9.0%
Source: Company presentation, analyze by IKI

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 Issue 003 | 20 December 2019
IKI predicted coal demand from the
domestic market expected arround 160 Mt,
increase around 16% y-o-y or lower than
ESDM growth but IKI number for DMO still
above ESDM. With the assumption demand
from the power plant will increase more than
21% y-o-y due to addition more than 3000
MW from new coal-fired power plants
expect to be fully operated in 2020, like
PLTU Jawa 7, PLTU Jawa 8, PLTU P.Susu 3-
4, PLTU Jayapura and etc. IKI also forecasts
cement consumption expected to grow
slightly next year at the level of 2%, drive by
our expectation that the construction of the
new capital city in East Kalimantan together
with other government projects will start in
2020. However, for other industries like pulp
and paper, mineral processing and other our
expectation of coal demand will remain
bullish with growth around 5%.
Indonesia Regulation
IKI forecast on coal production above also
based on our expectation about some
regulation that may apply within next year.
IKI has compiled some new or amendment
regulations which may issue in 2020 and its
effect on coal production.
Table 4. Regulation In 2020
No Name of Regulation
Application of Minerba One Map Indonesia (Momi), Sales Modul
1 ESDM
Verification (MVP) and ect
2 Coal price mechanism in electricity
3 Revision on Mining Law
4 The use of national flag carriers for export commodities
5 Nickel ore export ban
6 Coal price cap for domestic
7 Law of Indonesia new capital
Source: various sources, compile by IKI
IKI has given red flags for the government
plan on the obligation using Indonesian-
flagged carriers vessel for export
commodities including coal. IKI believe this
policy will impact on reducing coal export
significantly. I think that the government
plan on implement this regulation in May
2019 seems applied without having
communication nor negotiation with the
importing countries (G2G), in the last coal
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conference with ESDM and also with coal
mines, we heard some importing countries
have given their concern about this
regulation and threatening to reduce or even
cancel their coal shipment from Indonesia
and divert it to other countries.
The miners also claimed that some of their
long-term buyers have postponed contract
negotiation next year because of this
regulation. IKI think the government ideas
on using Indonesian-flagged carriers for
export is a good policy to increase the
income, however, it will be better the
government cancels this policy especially for
coal due to high resistance from the
importing countries.
And if the government still want to apply this
regulation, IKI suggests applying this
regulation to other export commodities such
as nickel, iron ore, copper and etc. IKI
believe the resistance from importing
countries will be less as these commodities
have more added value than coal.
IKI gives green flags to the government
policy on revision on mining law, policy in
Product Status IKI’s Flag
Applied Yellow
ESDM Applied Green
The house Plan Green
Ministry of Trade Plan Red
ESDM Plan Green
ESDM Plan Yellow
electricity price adjustment, policy in Green
The house Plan nickel
ore export ban and law of the new capital
city, as these regulations will boost coal
production. IKI believe revision on the
mining law is an urgent and vital matter to
do next year not only for the coal industries
but also for other mining commodities. IKI
has discussed the effect of this regulation in
IKI's coal monthly report on the October
edition. The latest information IKI heard in
the market that ESDM may agree the size of
the IUPK-extension concession could be
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 Issue 003 | 20 December 2019
more than 15,000 Ha, but subject to the
house (DPR) approvals. We also heard some
rejection and support about the revision of
the mining law among DPR members. DPR
said that revision on the mining law has been
included in the national legislation program
in 2020 and expects to complete before the
expiring license of one big CCOW.
Nickel ore export ban will increase demand
coal for nickel processing plants. IKI also
thinks the policy of nickel export ban will
reduce government income in 2020, and the
easiest and fastest way to overcome the
decrease in the short term is by increase coal
production. IKI also put the law on the new
capital city construction as a green flag for
coal production as coal demand will expect
to grow in-line with increasing demand for
material construction like cement, steel,
power and etc.
IKI has given yellow flags for the ESDM
application program in monitoring coal sales
and production together with the policy of
coal price cap for domestic. In the IKI last
month's coal report we have concluded that
the policy of coal price cap did not give any
effect to PLN as their price mechanism was
not determined by the HBA or the
international price, but more likely set by the
domestic price mechanism or ICI – discount.
IKI also concludes that the government plan
on price cap may affect reducing
government and miner's revenue.
For the ESDM application programs, IKI
thinks the program is good and could
simplify the reporting process to ESDM,
Interesting to find out how the progress of
these applications in the future as IKI thinks
the resistance may come from the internal
government itself.
IKI Conclusion
The government expectation on increase
income especially from the added-value
program in coal industries, whether in the
form of foreign investment nor domestic
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IKI Coal Monthly Indonesia
investment, unlikely to happen in the short
term. The majority project in coal added-
value claimed by the government on table 1
above did not exist, especially in coal
upgrading projects. For the coal gasification
project, the industries which involve in this
project claimed that the project was not
economical as the cost are twice than natural
gas price.
For the coal briquette projects, IKI found out
the company produces briquette face
difficulties in finding the market and IKI
believe this matter will reduce the interest of
the industries to this project. IKI finds out
that the progress project of coke making by
PT Megah Energi Khatulistiwa expects to
start production in 2020 and the Industries
probably wait and see how the performance
of this project.
IKI forecast Indonesian coal production in
2020 around 640 Mt which comes from our
studies on the coal industries performance in
the last 5 years strengthened with our
prediction on Indonesian coal demand and
also Indonesia's economic situation in next
year. Government income from nickel sector
expect to decrease due to export ban, and
further decrease expect to happen to other
major export commodities as some countries
do some protection to their market by
creating "trade war". For example CPO
(Crude Palm oil) export in 2020 will decrease
as UE increase their import tariff for the
Indonesia's CPO. The government must
overcome all decreases of the income, as
their expenses next year will increase
significantly due to the construction of the
new capital city.
IKI also believes our forecast on coal
production is robust as it also supported by
the Indonesian government in their APBN’s
explanation about Indonesian economy in
2020. The government said that they expect
coal mining sector will grow by more than 1%
in the next year by increase production
together with increase export.
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 Issue 003 | 20 December 2019
COAL PRICE
COAL OVERSUPPLY
HBA December 2019
Chart 3. Coal Price Movement
Source : ESDM, worked by IKI
ESDM has set Indonesian coal price
reference (HBA) in December 2019 is US$
66.3/t or only increases around 0.5% from
November. IKI calculated the increases only
caused by increase price on domestic basket
index (DBI) almost 1.5% m-o-m to US$
67.03/t, as the International basket price
index (IBI) decreased 1.4% to US$ 65.58/t.
IKI calculated overall HBA in 2019 has fall by
more than 21.3% y-o-y. Indonesia coal
mining association (APBI) said major reason
for the decrease because of the current
market situation which still oversupplies as
the Indonesia government failed to control
production. Meanwhile, the head of the
Indonesia mining institute, Irwandi Arif said
the decrease of price happens because of the
weak global economic situation as the
impact of the trade war between USA –
China together with low coal demand from
China and India due to environment matter.
In IKI discussion with a big coal mine in
Indonesia, they also claim the decrease
happens because of the oversupply situation
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as the Asian market is flooded with coal from
third countries like Russia, USA, and
Colombia, as the countries must change thei
coal market due to low demand from
Europe.
IKI will try to review about the oversupply in
our next report, however, IKI thinks that it is
very interesting every time coal price
decrease, the industries will say it because of
oversupply situation and always pointed
their finger to Indonesia as the main cause of
the decrease. Meanwhile the price they
mention in their statement probably
Newcastle price. From chart 3 above we can
see that IBI or Newcastle price falling
significantly by more than 27% y-o-y. But the
DBI, or Indonesian coal price falling only
16% y-o-y. Therefore in the term of HBA
price, we can say that the Newcastle price
was the major cause of decrease and not
Indonesia price.
And regarding the statement which
mentions the oversupply happen due to
increase supply from Russian, USA, and
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 Issue 003 | 20 December 2019 IKI Coal Monthly Indonesia

Colombia coal to the Asian market. IKI find
this statement is very interesting, because
how the USA and Colombia can still sell their
coal to the Asian market when the price was
falling? And why the Asian market wants to
buy coal with higher freight cost?
royalty around 50% to Ferronickel and
Nickel matte, as IKI think by reducing rate
on metal and increase rate on ore sales, the
government want to encourage the
industries to do upgrading activities and
reduce export ore.

IKI forecast coal price in January 2020 will
increase better due to increasing demand
from China for stockpiling and safety issue.
IKI also expect rising demand from India and
the third country. Meanwhile, from the
supplier side, IKI thinks with the current
high price of South African coal will effect
increase demand for Indonesia coal,
especially from the Southern Asia market for
looking at a better price. High intensity of
rain which will happen in Indonesia in
January will give sentiment on tight supply
over Indonesian coal.
Table 5. Major Mining Royalty
However, It seems that the government
doing different treatments on the coal
sectors. IKI notice there are no different in
the rate of royalty, but the government has
increased range of the calorific value of each
royalty. On the table 5 below we can see the
government has increase upper limit
calorific value of the low rank coal royalty
from 4200 GAR to 4700 GAR, IKI calculate
this matter will decrease government
income from the coal sector in the future as

No Commodities Specification Quality New rate Change

1 Coal Ore ≤ 4700 GAR 3% Calory grade
2 Coal Ore 4700 - 5700 GAR 5% Calori grade
3 Coal Ore ≥ 5700 GAR 7% Calori grade
4 Iron Ore All grade 10% Increase
5 Nickel Ore All grade 10% Increase
6 Iron Sand All grade 10% Increase
7 Manganese Ore All grade 10% Increase
8 Copper Ore All grade 5% Increase
9 Ferronickel Metal All grade 2% Decrease
10 Nickel matte Metal All grade 2% Decrease
Source: Indonesian Government, compile by IKI
majority Indonesian coal production was
Mining Royalty Rate below 5000 GAR. IKI thinks this matter will
affect more coal exploitation will happen in
Last month Indonesian government has the future to overcome decrease on the
released new government regulation (GR) government income.
no. 81/2019 about rate of non-tax revenue in
the mining and also the royalties. This Market news
regulation will take effect since end of
ESDM claim total government income from
December 2019. IKI has compiled some
non-tax revenue of mining sector until third
major mining royalty as per the table 5
quarter of this year around IDR 29.74 trillion
above. IKI believe the government has done
or only 68.8% from this year target due to
some studies and research before setting the
decrease coal price. Bambang Gatot said they
royalties rate in this regulation. IKI notice for
will try to reach this year target by maximize
mineral ore the government has increase
supervision in coal sales and production
royalty rate 25% - 233%, with the huge
activities.
increase happen on nickel ore royalty, but on
the other side, government has decrease

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 Issue 003 | 20 December 2019 IKI Coal Monthly Indonesia

Coal Production
Sales Modul Verification (MVP)
Review 2019
ESDM temporary data shows that Indonesia
coal production until October 2019 around
420.4 Mt, increase 2.6% y-o-y, consist of
326.5 Mt for export and 93.96 Mt for
domestic. However, IKI calculate that
Indonesia coal production in the same
period around 497.1 Mt, consist of 383.4 Mt
export and 113.7 Mt domestic. With the
production figure until October, we still
maintain our forecast of coal production
this year 600 Mt.
claim that this program could reduce illegal
sales activities.
ESDM also said that the MVP application is
an integral part of the previous online
service system in the mining sector, such as
Non-Tax State Revenue (PNBP), Minerba
One Map Indonesia (MOMI), Minerba One
Data (MODI) and Minerba Online
Monitoring System (MOMS) and will start
be applied in 1st January 2020. Bambang also
warns that if miners not applied with these
programs then they cannot sales their coal.

IKI find some response from the miners

MVP Program
IKI thinks different number production
between ESDM and IKI as per above due to
different interpretations on the data,
whereas ESDM counted production based
on the mine report meanwhile IKI
calculates production based on export and
domestic number, which IKI think more
realistic. ESDM said there are also different
numbers of production between the
Indonesian ministries, and to solve these
issues ESDM has launched a new
application program to control sales, named
Sales Modul Verification (MVP).
which majority of them said that the
application is good and can minimize
reporting time to ESDM, but the application
may reduce their sales flexibilities to a new
market. IKI also think that this application
is a good idea to control sales and
production, and hope that the application
can get support by all government especially
ESDM in the provinces. IKI also hopes that
the application can be used for a long time,
as IKI understands if there are changes
happening on the Indonesian government,
either structure and or functional, then the
program will be also changing.

Directorate General of mineral and coal of Mine by Mine Production Forecast

ESDM, Bambang Gatot Ariyono said MVP is
a program initiated by ESDM to improve Major coal companies in Indonesia has
accuracy data of sales in the mining sector given their production expectation in 2020
and to avoid difference data between ESDM as IKI compile on the table 6 below.
and other ministries. ESDM also
Table 6. Mine Production (Mt)
No Groups 2019 2020 Growth
1 Adaro 58 56 -3,4%
2 Indika 35,5 37 4,2%
3 PT Bukit Asam 28,5 30 5,3%
4 Geo Energy Resources 8 19 137,5%
5 Toba Bara 4,6 5 8,7%
6 Harum 3,8 4 5,3%
7 Atlas Resources 1,7 3 76,5%
8 Mandiri Inti Perkasa 5,5 6 9,1%
9 Berau Coal 32,1 33 2,8%
Source: Company presentation, analyze by IKI

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 Issue 003 | 20 December 2019
IKI calculate until Q3 of 2019 total Adaro
groups production around 43,9 Mt or
increase around 13% y-o-y, which make
their production in 2019 around 58 Mt. In
2020, IKI has decreased Adaro production
target to only 56 Mt, as we think Adaro will
focus to their power plant project. IKI also
predict coal production of Indika, Toba
Bara, and Harum will increase slightly next
year as their mine already in the high cost.
IKI forecast PT Bukit Asam (PTBA)
production next year will increase only 5.3%
to 30 Mt due the infrastructure constraint.
In order to increase more production, IKI
heard that PTBA plans to re-open their
Ombilin mine next year with target
production around 0.3 Mt. IKI believe it will
be difficult for PTBA to produce coal from
this mine especially with the recent market
situation. The Ombilin mine already in high
stripping ratio compounded with
infrastructure difficulties will make their
production cost higher and causes their coal
less attractive to the export market. But, the
case will be different if PTBA targeting
supply only to nearby power plants or the
cement companies but with “negotiable
price”.
Atlas Resources and Geo Energy's
production in 2020 increase respectively
76% and 137% y-o-y. Atlas said next year
they will increase production from their
Kalimantan and Sumatra mine, and plan to
expand their sales to the export market.
However, IKI believe Atlas production
target seems too optimistic and will be
difficult to achieve, due to their mine
condition, coal quality and their financial
condition. IKI has done research about
Atlas's financial condition and we found out
that their debt to asset ratio (DAR) is at a
high level together with their low cash &
cash equivalent situation, will be difficult by
the company to fund the expansion and also
to attract investors.
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IKI Coal Monthly Indonesia
Geo energy said their production next year
will be increase more than 135% to 19 Mt,
consist of South Kalimantan mine
production around 12 Mt and South
Sumatra production around 7 Mt. IKI
predict major production in South
Kalimantan will be from their TBR mine,
meanwhile for their target production in
South Sumatra mines, IKI think the
company will get difficulties to achieve it
due to infrastructure constrain as the only
cheap and available transportation for coal
only by train. They can also use hauling road
owned by Titan group which dedicated for
coal, however it may increase their cost and
will cause their coal less attractive to the
market.
Production News
 IKI heard the Indonesia government
has set coal production target for
Jambi province next year around 12 Mt
or decrease 7.7% from 2019. However,
IKI think this number is temporary and
could be changed in the second half of
2020.
 This month PT Arutmin has applied for
the extension its mining business
license to ESDM. Arutmin is one of
CCOW first generation holder in
Indonesia with production per year
around 25 Mt. The company mining
license will be expired in November
2020 and based on mining laws, their
license shall be change to IUPK.
M&A News
Adaro and Bumi Resources do not plan to buy
coal mine next year. Adaro said next year the
company will focus on developing existing
mines and their power plant construction,
while Bumi claimed that they are not
interested in doing acquisition as they have
huge coal reserve.
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 Issue 003 | 20 December 2019 IKI Coal Monthly Indonesia

Indonesia Coal Export

China’s Signal
Total Export 2019 Chart 4. Indonesia coal export (Mt)

Source: Indonesia government worked by IKI

ESDM temporary data shows total coal 15%, 16% y-o-y to 24.6 Mt, 14.9 Mt and 6.6
export until October 2019 around 326.5 Mt Mt.
increase 5.6% y-o-y, meanwhile IKI calculate
total coal export in the same period around Export October 2019
383.4 Mt or increase almost 7.5% y-o-y, with
total export to China and India respectively 1. By Province
more than 125.4 Mt and 101 Mt or increase
IKI calculate Indonesia coal export in
13.1% and 12% y-o-y. Total export to Vietnam
October 2019 around 40,97 Mt, grow by
and the Philippine also increase respectively
more than 9% m-o-m but only slight
28% and 24% to 12.27 Mt and 22.91 Mt.
increase 1% y-o-y. Almost all Kalimantan
Export to some third countries like
province shows increase export in October,
Cambodia, Bangladesh, and New Zealand
except for Central Kalimantan which IKI
also increase respectively 26%, 117%, and
think probably because of the price and
148% to 2.16 Mt, 4.1 Mt, and 0.79 Mt.
infrastructure matter. Bank Indonesia’s of
Central Kalimantan also support IKI
IKI notice that in 2019 Italy not importing
assumption, they said economic growth in
any coal from Indonesia probably because of
this province in the third quarter was
the country policy to reduce coal usage in
declined as the impact of slowdown in
power plants. While Indonesia's coal export
mining sectors due to low coal price and
to Spain has slumped almost 65% y-o-y to
problem in coal transportation. South
only 1.3 Mt as power production from
Kalimantan record the highest increase of
thermal plants decrease due to increase
export among the Kalimantan provinces
production electricity from renewable
around 11% to 13.48 Mt, due to increasing
plants. Indonesia export to Korea, Thailand
demand from China.
and Hongkong has falling respectively 21%,

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 Issue 003 | 20 December 2019 IKI Coal Monthly Indonesia

Table 6. Export by Province (Mt)

Province Oct-19 Sep-19 m-o-m Oct-18 y-o-y

East Kalimantan 22,09 20,58 7,3% 21,19 4,2%
South Kalimantan 13,48 12,1 11,4% 13,61 -1,0%
North Kalimantan 2,07 2,01 3,1% 1,79 15,9%
South Sumatra 1,62 1,15 40,8% 2,11 -23,2%
Lampung 0,69 0,47 45,8% 0,47 45,1%
Aceh 0,63 0,83 -24,4% 0,61 2,4%
Jambi 0,20 0,15 35,7% 0,24 -13,9%
Bengkulu 0,18 0,13 35,2% 0,40 -55,8%
Central Kalimantan 0,01 0,03 -65,3% 0,00
Riau 0,00 0 0,00
West Sumatra 0,00 0 0,00
Total 40,96 37,45 9,4% 40,42 1,3%
Source: Indonesian government worked by IKI

Export from Sumatra provinces, except Import in October was reduced as decrease
Aceh, shows better performance than last coal import activities in some major ports in
month. Bengkulu provincial government India. However, IKI thinks this news was not
claims the increase around 35% m-o-m, due correct as IKI notice in October 2019,
to increasing demand from India. imported coal for all Indian power plants
Nevertheless, compared to last year, IKI increase more than 14% m-o-m due to low
calculates that overall Sumatra export was domestic coal supply. The Indian
falling, with a big decrease of more than 30% government also said domestic coal
were happened in Jambi followed by production in Oct 2019 only 44.5 Mt or
Bengkulu and Lampung decrease decrease almost 20% y-o-y, with the news
respectively 12.8% and 1.5%. Aceh show from Indian government IKI expect coal
different trends among other with an demand from India in November 2019 will be
increase of more than 50% y-o-y due to its increase.
near location to the market.
Table 7. Export by countries (Mt)
No Country (Mt) Oct-19 Sep-19 m-o-m Oct-18 y-o-y
1 China 13,14 11,65 12,8% 13,00 1,1%
2 India 11,58 10,7 8,3% 12,02 -3,6%
3 Philippines 2,14 2,47 -13,3% 1,90 12,8%
4 South Korea 2,40 2,21 8,7% 2,65 -9,2%
5 Japan 2,55 2,14 19,3% 1,93 32,3%
6 Malaysia 2,17 2,09 3,8% 2,16 0,6%
7 Taiwan 1,58 2,11 -25,2% 1,61 -1,9%
8 Vietnam 1,10 0,9 22,1% 1,08 1,8%
9 Thailand 1,89 1,42 33,0% 1,73 9,2%
Source: Indonesian government worked by IKI

2. Export by Major Countries

Coal export to China and India in October
2019 increase respectively 12.8% and 8.3% m-
o-m to 13.1 Mt and 11.5 Mt. IKI notice some
news in the market claim that Indian coal
IKI note the increase Indonesian export to
China in October 2019 shows different trend
to their import activities which slump
around 15% m-o-m to only 25.7 Mt due to
tight import restriction and could be signal

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 Issue 003 | 20 December 2019
that Indonesian export in November will
decrease. Decrease Indonesia export to
Philippines and Taiwan respectively around
13% and 25% to 2.1 Mt and 1.58 Mt m-o-m due
to decrease demand from power utilities.
Chart 5. Viet Nam Import (Mt)
Source: Viet Nam government, worked by IKI
Indonesian export to Viet Nam in October
increase 22.1% m-o-m to 1.1 Mt as demand of
imported from the utilities increase. IKI
calculate until October 2019 Vietnam has
import around 30.59 Mt or increase 28% y-o-
y, with shares of Indonesia and Australia coal
respectively 41.1% and 38.6%.
IKI Market Watch
 Pakistan
Pakistan government said that in the future
their coal demand will be increase
significantly to meet increase demand of
power for public and Industries. In the two
decades Pakistan power production growth
in the low pace which causing blackout in
the countries. And in 2018 Pakistan
government record increase of power plants
generation from 22 GW in 2012 to 33 GW in
2018. And with funding help from China,
Pakistan will build more power plants in the
future to reduce gap between power supply
and demand. In 2018, coal share in Pakistan
energy mix account around 13% with total
coal consumption around 21 Mt or increase
17% y-o-y, and around 75% of their coal
consumption supplied by imported coal.
Pakistan have abundance coal reserve
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IKI Coal Monthly Indonesia
however due to problem in the
infrastructure, old mining methods together
with the coal quality of low calorific value
and high ash - high sulfur content will cause
domestic coal production will grow lower
than demand.
Table 9. Pakistan Coal Demand (Mt)
Year Coal demand Imported coal Domestic coal
2015 9 4,9 4,1
2016 11,1 7 4,1
2017 18 13,7 4,3
2018 21 15,8 5,2
2019 20,5 15 5,5
2020 35,5 30 5,5
2025 57 47 10
Source; Pakistan government, worked by IKI
As per Table 9 above, IKI has forecast
Pakistan coal demand in 2025 will be around
57 Mt or increase about twice than this year
consumption, with our assumption around
eleven coal fired power plant projects with
total capacity more than 8.5 GW, will be full
operate before 2025. And with the current
domestic supply condition, IKI forecast
domestic coal production in 2025 will be only
10 Mt. Therefore, to overcome coal power
demand the Pakistani must import around
47 Mt. IKI believe in 2025 Indonesia market
share will increase as majority Indonesia coal
quality are low ash and low sulfur content.
But the major problem which may hinder
demand of imported coal from this country
will be on the completion date of the plants
as reported major plants are having fund
issues together with ports capacity, at this
moment almost all coal vessel for Pakistan
market are handymax.
 Pakistan market share
In 2018 Pakistan has import coal around 15.8
Mt, which dominate coal from South Africa
(59.5%) followed by Indonesia (20.1%),
Afghanistan, Mozambique and Russia share
respectively 6.7%.6.5% and 4.1%. as showed
on chart 6 below. However, in 2019 South
Africa share in Pakistan coal market increase
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 Issue 003 | 20 December 2019 IKI Coal Monthly Indonesia

significantly to 72%, followed by Indonesian major Indonesian miner like Bumi

coal with share almost the same with 2018.
Chart 6. Pakistan Coal Market Share
Resources, Adaro, Prima Multi Mineral and
many more sell their coal to Pakistan market
by using trader. IKI have listed major
Indonesian supplier to Pakistan as per table
10 below.

Anugerah Lumbung Energy is major supplier

Source; Pakistan government, worked by IKI
The most interesting on the chart above we
see decrease import coal from third
countries like Mozambique, Russia and USA,
where their market share in 2019 respectively
only 0.48%, 0.49% and 0.00%. IKI think this
matter happen because of decreasing on coal
price make coal from these countries less
attractive.
IKI also find that there was no Australian
coal sell to Pakistan since 2018, which IKI
think probably because Australia coal have
same quality with South African coal, which
make coal from Australia less attractive on
the freight.
Table 10. Indonesia Supplier
to Pakistan accounted around 14%, followed
by Kalimantan Energi Lestari 12.3%, both this
company supplied their bituminous coal by
using trading company.
Bumi Resources share to Pakistan only
around 6.7% and supplied LRC from its KPC
mine and Bituminous coal from Arutmin
mine, and IKI also notice Bumi using their
trading arm to sell their coal to Pakistan.
Adaro, Prima Multi Mineral, Titan Mining
supplied to Pakistan by using same trading
company with market share respectively
6.5%, 4.8% and 6.3%.
IKI notice that Bayan group supplied LRC
from its Tabang mine and directly supplied
to customer in Pakistan with share 6.5%.
Resource Alam and Singlurus Pratama also

Coal type
No Supplier Status Share
1 Anugerah Lumbung Energi Miner 14.3% Bit
2 Kalimantan Energi Lestari Miner 12.3% Bit
3 Bumi Resources Miner 6.7% Bit and LRC
4 Adaro Miner 6.5% Sub Bit
5 Bayan group Miner 6.5% Bit and LRC
6 Titan Mining Trader 6.3% Sub bit
7 Prima Multi Mineral Miner 4.8% Bit
8 Resource Alam Miner 4.2% LRC
9 Singlurus Pratama Miner 4.2% LRC
Source: IKI

supply directly their LRC coal to Pakistan

 Indonesian Supplier
customer with share around 4.2% each.
IKI analyze that in 2019 majority Indonesia
coal export to Pakistan are categorize as Bit
and Sub-bit with few LRC. IKI also note

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 Issue 003 | 20 December 2019 IKI Coal Monthly Indonesia

Market news:
 South Korea government said they
have shut down 10 coal fired power
plants this month as part of the
government plan to close 15 coal fired
power plant from December –
February 2020 to reduce air
pollution. The energy minister of
South Korea said 41 coal fired power
plant will continue to operate in 2020
at the level 80%.
 Some power plant in Asia has
release coal tender for the year
2020 – onward as IKI compile on
tabel 8 below. IKI conclude from
coal specification requirement,
Indonesia miners has big
opportunity to supply coal to all
company on the table below.

Table 8. Tender

Quantity
No Company (Mt) Quality (GAR) Delivery
1 Kospo 0,16 GCV 4200; TS 0,35%; Ash 4% Feb - Mar 2020
2 Kowepo 2,28 GCV 4700; TS 0,7%; Ash 15% Q2 2020 - 2024
Jan 2020 - April
3 Viet Nam electricity 10,8 GCV 4700; TS 0.8%; Ash 9% 2022
4 Guodian Corp. 0,8 GCV 4200; GCV 5200; GCV 5700 Jan - Mar 2020
5 Huaneng Power 0,7 GCV 3800 - 5200 Jan-20
Source; various source, compile by IKI

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 Issue 003 | 20 December 2019 IKI Coal Monthly Indonesia

Domestic Demand
Power Plant Consumption
ESDM temporary data shows until October
2019 Indonesia domestic coal consumption
around 93.96 Mt or increase only 4.4% y-o-y,
meanwhile IKI calculated that total coal
consumption around 113.7 Mt, consist of 79.6
Mt for power plant, 11.6 Mt for cement and
rest consumption for other industries like
textile, pulp and paper, and many more.
1. Power plant consumption
IKI calculate coal consumption for power
plants in October 2019 increase almost 5%
m-o-m to 8.4 Mt, consist of 5.75 for PLN and
2.65 Mt for IPP.
Table 11. Major power plant coal consumption (Mt)
governments plan to do weather
modification for the rain.
PLTU Pacitan and PLTU Lontar coal
consumption falling more than 33.3% and
46.3% m-o-m respectively to 0.18 Mt and
0.22 Mt. In our assessment we find out that
PLTU Pacitan was stop operation due to the
damage on the power lines transmission
which causing cut off power transportation
from PLTU Pacitan to their customer in
Central Java and East Jawa. IKI think PLTU
Lontar also stop operation because of the
damage, as their coal consumption decrease
significantly.

No Power Plant Owner MWH Location Oct-19 Sep-19 m-o-m

1 Suralaya 1 - 7 PLN 3400 Banten 1,12 0,92 21,7%
2 Lontar PLN 945 Banten 0,22 0,41 -46,3%
3 Tanjung Jati B 1- 2 PLN 1420 Central Java 0,34 0,34 0,0%
4 Paiton 5-6 IPP 1260 East Java 0,39 0,32 21,9%
5 Paiton 3 IPP 1220 East Java 0,27 0,32 -15,6%
6 Tj Awar - awar PLN 700 East Java 0,25 0,31 -19,4%
7 Paiton 7 -8 IPP 1230 East Java 0,43 0,30 43,3%
8 Tanjung Jati B 3-4 PLN 1420 Central Java 0,35 0,28 25,0%
9 Pelabuhan Ratu PLN 1050 West Java 0,35 0,27 29,6%
10 Pacitan PLN 630 East Java 0,18 0,27 -33,3%
11 Indramayu PLN 990 West Java 0,31 0,26 19,2%
12 Adipala PLN 660 Central Java 0,24 0,25 -4,0%
Source: various sources, worked by IKI
2. Cement consumption
The table1 above shows major power plant
IKI calculates cement consumption in
coal consumption in Indonesia. We can see
October 2019 almost 8.0 Mt increase more
almost all coal-fired plants (PLTU) increase
than 9.3% m-o-m and 4.3% y-o-y. As per the
coal consumption and also increase power
chart 6 below, IKI can say that cement
production. IKI think this matter happened
consumption in October was the highest in
due to the rising demand for electricity
2019. The same also mention by PT
because of the hot weather and low
Indocement Tunggal Prakarsa which said
electricity production of hydro plants. It was
their cement sales in October around 1,87 Mt
reported that some hydropower plants were
or increase 3% y-o-y, Indocement claim their
get low supply of water to produce power,
sales in October were the highest sales in-
and to solve this matter some provincial
2019. IKI also calculates total semen
consumption (domestic and export) until

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 Issue 003 | 20 December 2019 IKI Coal Monthly Indonesia

Chart 6. Cement Consumtion (Mt)

Source: IKI

October 2019 around 61.44 Mt or decrease The project will start next year and
slightly 0.2% y-o-y. expect to complete around 2023 –
2024. The company claim total coal
On the other side, PT Semen Baturaja said
consumption per year for these
their cement sales until October 2019
plants around 7 Mt of medium
decrease around 3% y-o-y to only 1.69 Mt due
calorie coal.
to low demand, and to anticipate decrease of
revenue the company plan in doing  Government program on coal
efficiency on energy fuel by change their coal gasification gets respond from the
consumption from medium calory coal 5500 industries. Director PT Pupuk
GAR to low rank coal 4500 GAR. Indonesia said they have done a
study with PTBA for the coal
Market news:
gasification projects and they
 PT Barito Pacific said at this moment conclude that the project not
the project of PLTU Jawa 9 dan PLTU economical as the project cost
Jawa 10 is on the finalization stage. around US$ 11 – 14/mmbtu or above
Barito Pacific also said total power government gas price for the
capacity of these projects around industry which set around US$
2000 MW with cost around US$ 3.3 6/mmbtu. However, PT Pertamina
billion. These projects will be funded claim they will continue coal
by Bank and by the company funds gasification project with PTBA due to
with shares around 75% and 25%. increase demand of gas in the futures

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 Issue 003 | 20 December 2019 IKI Coal Monthly Indonesia

Infrastructure
Port by Port Performance

Major Port Export

Table 10. Export by major ports (Mt)

No Ports Oct-19 Sep-19 m-o-m Oct-18 y-o-y

1 Samarinda 8,6 7,3 18,1% 7,6 14,2%
2 Banjarmasin 7,3 6,2 17,3% 7,1 2,7%
3 Tanjung Bara 4,6 4,5 2,0% 4,0 14,5%
4 Satui 4,9 4,7 4,4% 4,6 7,5%
5 Muara Pantai 3,6 3,2 13,6% 3,4 8,4%
6 Adang Bay 2,3 2,1 8,1% 2,1 10,0%
7 Balikpapan 0,9 1,2 -22,5% 1,7 -43,7%
8 Palembang 1,6 1,1 47,2% 2,1 -23,2%
9 Tarakan 1,5 1,5 -0,7% 1,0 54,9%
10 Bontang 1,0 1,1 -6,5% 1,5 -33,2%
11 Sangkulirang 1,0 1 0,6% 1,0 2,1%
12 Kotabaru 0,5 0,6 -10,4% 0,8 -33,3%
13 Tarahan 0,7 0,5 37,0% 0,4 86,8%
Source: Government institution, worked by IKI

Coal export from some major port shows
increase performance compare to last month
due to increase demand from major market
like China and India. IKI record increase
export from Samarinda and Banjarmasin
port around 18% and 17% respectively to 8.6
Mt and 7.3 Mt. for Banjarmasin port the
increase drive by increase demand from
China, Malaysia and Taiwan, meanwhile for
Samarinda port the increase happen due to
increase export to India, Japan and Viet
Nam. Major port in Sumatra like Palembang
and Tarahan port show increase export
respectively around 47% and 37% due to
increase demand from India, Malaysia,
Hongkong and Pakistan
For Kotabaru, IKI calculated export to China
increase significant by more than 100% but it
cannot give effect to overall port export
performance as their lost their market to
India. IKI also heard some coal mine on this
region reduce production or even stop
production due to low price situation.
Meanwhile ITMG export from its major port
decline 22.5% m-o-m, IKI calculate export
coal from this port to India and Bangladesh
increase respectively 85% and 59% m-o-m,
however in the same time export to China
and Philippines decrease respectively 18%
and 77% m-o-m.
Market news :
 PT Astrindo Nusantara Infrastruktur
hope they can complete construction
of coal port in South Sumatra. The
port size around 100 Ha with capacity
expected around 5 Mt per annum.
The company also plan to increase
port capacity up to 24 Mt per year.

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