Indonesia's coal miners want higher 2022 output target: official

Indonesian coal miners want to increase their production targets for the current year, a senior Indonesian government official said, encouraged by the robust 2021 and first quarter 2022 financial performances.

"Some companies submitted their revised work plans and budget for 2022," Lana Saria, director of coal business development at Indonesia's Directorate General of Mineral and Coal, part of the country's Energy and Mineral Resources Minist

The latest work plans are expected to be approved and finalized by the end of July, Saria told S&P Global Commodity Insights this week, after which the new coal production target will be known. The development takes place at a time when buyers across the world are looking to procure alternative sources of coal after sanctions imposed on Russia. Indonesia is the world's largest coal exporter.

At a Jan. 12 press conference, Indonesia's minister for Energy and Mineral Resources Arifin Tasrif had announced that the country's coal production target for 2022 was 663 million mt. Its coal production target for 2021 was set at 625 million mt, while actual coal output for the year was 614 million mt.

On the back of prevailing global demand-supply dynamics amid the Russia-Ukraine war, Indonesian miners expect coal prices to stay above that of 2021 throughout 2022.

The Indonesian 4,200 kcal/kg GAR price averaged $67.99/mt FOB in 2021, according to data by S&P Global. As of May 19, the grade's average 2022 price was $88.21/mt FOB. The Kalimantan 5,900 kcal/kg GAR coal price averaged $113.80/mt FOB in 2021, while as of May 19, it averaged $174.89/mt FOB in 2022.

Several large coal miners in Indonesia announced their production forecasts for 2022, expecting a significant increase from 2021 output levels.

Higher prices, higher output, higher profits

Indonesian coal miner PT Bumi Resources on May 12 said it plans to produce 83 million-89 million mt of coal this year, against the 78.8 million mt in 2021. Bumi, which reported a 118.7% annual rise in profit to $488.6 million, expects coal prices to range between $87-$104/mt in 2022. The company's realized coal prices for 2021 was $67.40/mt, up from $44.20/mt in 2020.

PT Bukit Asam, or PTBA, in its annual report published April 26 said its sales volume is expected to rise 30.77% on the year to 37.1 million mt in 2022.

Additionally, PT Indo Tambangraya Megah on May 18 said it plans to increase its 2022 sales by up to 21.5 million mt from 20.1 million mt in 2021. It had reported May 10 a net profit of $213 million in Q1 2022, up from $204 million reported in Q4 2021 and $42 million in Q1 2021.

Adaro Energy on May 12 announced plans to increase its 2022 output by up to 13.85% on the year to 58 million-60 million mt.

As previously reported by S&P Global, market participants have raised concerns that the unavailability of mining equipment has posed a challenge to boosting production, with some producers saying that it takes up to a year for machineries to be delivered.

In 2021, heavy, unseasonal rainfall and COVID-19 related lockdowns had resulted in below-target production levels, traders said.