Indonesian coal prices and volumes are expected to recover in 2021 and help improve credit metrics, Fitch Ratings said Nov. 25.

The ratings agency forecast Indonesian 4,200 kcal coal prices to increase to $32.5 per tonne from $27/t in 2020, while aggregate volumes of Fitch-rated miners are anticipated to inch higher by 6% after posting a decline of 3% this year.

Fitch noted that most Indonesian coal miners had cut mining expenses due to lower fuel costs, renegotiated contract mining rates and revised mining plans. Fitch expects the lower costs to extend to 2021, likely boosting earnings.

Meanwhile, the agency said that it anticipates the state to provide further clarity on the renewals of the first-generation mining contracts of work in the near-term. Fitch continues to consider the implications of the renewals — applicable to PT Adaro Indonesia and PT. Indika Energy Tbk, which have contracts of work that will expire on October 2022 and March 2023, respectively — as event risks.

Fitch maintains negative outlooks on Indika, PT Bukit Makmur Mandiri Utama and PT ABM Investama Tbk, reflecting limited headroom due to weak credit metrics following sluggish industry dynamics. Meanwhile, the stable outlooks on Adaro, PT Bayan Resources Tbk. and Golden Energy and Resources Ltd. continue to reflect their comfortable ratings headroom.