The Jakarta Post reports that Indonesia has made no progress in limiting extraction to aid the sustainability of known coal resources. “Amid a declining global price, the country’s coal output keeps growing. The government failed to meet its commitment to limit coal output to the same level as last year. Early this year, the Energy and Mineral Resources Ministry’s mineral and coal directorate general said it would cap total coal production for this year at 421 million tons — similar to the 2013 output — partly by controlling coal diggers’ work plans.
“Until October, the policy went smoothly as the 10-month-output was in line with the full-year plan.
“In November, however, things changed. It was revealed that during the January-November period, as many as 427 Mt of coal had been extracted, with around 366 Mt sent overseas.
“Thus, the mineral and coal office adjusted its full year coal output’s estimation to 458 Mt, which is almost a 9% increase from last year’s figure.”
The increase in output is partly caused by better documentation,” the mineral and coal director general, R. Sukhyar, said in a recent interview.
On October 1, the government implemented a policy requiring coal miners to obtain export licenses. The licenses require them to have a “clean and clear status”, a term referring to coal miners’ compliance to royalty and tax obligations as well as being free from conflict due to overlapping claims of ownership.
Moreover, the ministry is also cooperating with the Corruption Eradication Commission (KPK) to crack down on illegal mining activities.
The Jakarta Post also notes “government has been criticised for its poor coal management. There are reports that coal exports are lower than the actual volume of coal shipped overseas.
“The country’s 2013 coal output was questionable. The official report repeatedly claimed the national output was 421 Mt in 2013. However, the ministry’s Energy Outlook 2014 report said that coal output in 2013 was 431 Mt. The report also said Indonesia’s coal resources reached 28,970 Mt.
“Assuming that coal output is at the current level, the country’s coal production could only last for the next 50 years, the report added.
“A domestic market obligation (DMO) for coal has been implemented for several years to ensure that domestic buyers have access to Indonesian coal. Also, the DMO is set to increase from year to year, with the government expecting producers to reduce its dependency on the overseas market.
“Last year, 85 Mt were directed to local buyers. Domestic absorption is expected at 95 Mt this year and 110 Mt next year.
“However, once again infrastructure hurdles made the policy unrealistic. State-owned electricity firm PT Perusahaan Listrik Negara, the biggest domestic user of coal, said that its planned coal usage was 55 Mt this year, meaning that there was uncertainty on whether the domestic obligation of 95 Mt of coal would be fully absorbed by local users.
“The slow growth of power-plant development, which is caused mostly by land acquisition issues, has contributed to slower growth in domestic coal absorption compared to the pace of increases in production set by miners, which are trying to balance the weakening price by selling more.
“Price pressures are expected to continue as global demand slows. The International Energy Agency’s (IEA) World Energy Outlook report reported that global coal demand grew and would increase at an average of 0.5% per year between 2012 and 2014, a much lower rate compared to 2.5% over the last 30 years.
“The growth is hampered not necessarily by a weakening economy but by new air pollution and climate policies in the main markets, particularly in the US, China and Europe.
“Amid the bleak outlook and rising environmental concerns, the ministry once again expects next year’s production level to be similar to this year’s, at no more than 460 Mt.
“The public will see if the realisation of the policy is as poor, as the government still considers coal as a source of state revenue amid declining prices instead of securing supply for future utilisation.”