Issue 16 | 31 January 2021

&MINERALS

Highlight
ESDM LETTER TO
PROVINCIAL
GOVERNMENT
UPDATE ON THE MINING
LAW JUDICIAL REVIEW

Coal Price | China government Vs Prices

From “The Media” If The Outbreak Continues?
Coal Production | Coal Production Quota by Province in 2021
Indonesia Coal Export | China’s Situation,
The Increase in Power Price?
Domestic Coal Demand | DMO Realization in 2020
Infrastructure | Floods in South Kalimantan
 ESDM LETTER Letter to provincial government
2
TO PROVINCIAL
PT Indeks Komoditas Indonesia (IKI) noticed that on 8
GOVERNMENT
December 2020, ESDM sent a letter to all provincial
governments in Indonesia about the revocation of
UPDATE ON THE
provincial government authority in the mining industry,
MINING LAW
transferring the entire authority in mining management to
JUDICIAL REVIEW
the central government. ESDM in its letter no 1481/30.01/
DJB/2020 said the revocation of the provincial government
authority is based on the new mining law no 3/2020
clause 173C, and in this letter, ESDM also mentioned
there are seven authorities which are then transferred
from provincial government to the central government
such as:

1 Licensing authority in coal and mineral sectors

2 Authority in developing and supervising IUP’s coal

and mineral activities

3 Authority in carrying out the auction on mineral metal

mining areas (WIUP metal) and coal mining areas
(WIUP coal)

4 Authority in giving WIUP for non-metals, WIUP for

certain types of non-metal, and WIUP stones

5 Authority in the approval of miners’ annual work plan

and budget (RKAB)

6 Authority in the approval of IUP shares transfer

7 Other authorities in coal and minerals which are

mandated by the law no 4/2009 and its derivative
regulations, and also authorities mandated by other
laws to local/provincial governments in coal and
mineral sectors.

IKI also noticed that in this letter ESDM also requested

the provincial governments to submit/hand over all of
the IUP documents to the central governments, which
include:

The exploration reports

The feasibility study reports along with their approvals

2
 ESDM LETTER The environmental documents such as Amdal/UKL-
3
TO PROVINCIAL UPL/SPPL and their approvals
GOVERNMENT
The miners; guarantee in carrying mining exploration
UPDATE ON THE Initial plans on miners’ corporate social responsibility
MINING LAW (CSR) along with their approvals
JUDICIAL REVIEW
The reclamation plans and with their approvals

The post-mining activity plans and their approvals

The reclamation fees guarantee

The post-mining fees guarantee

Other documents related to license and approval in

accordance with the laws and regulations such as
documents on mining suspension approvals, approval
in the transfer of IUP shares, etc.

Documents on IPR, IUP OP for trading and

transportation, IUJP or mining service licenses, and
IUP for trading which were issued before the enactment
of the new mining law, but are still valid afterward.

The documents on IUP OP for mineral processing and

purification issued before the new mining law and are
still valid to the Ministry of Industry for renewal.

The documents in changing IUP exploration to IUP

operation and production

The documents for extension on existing mine licenses

The adjustment in the existing mines licenses in

accordances with changes in the investment status

In this letter ESDM also requested the provincial

governments to send documents on their approvals of
the miners’ 2021 RKAB which were issued before 10
December 2020 along with the RKAB documents to the
central government before 18 December 2020. ESDM
also wanted the provincial governments to send all RKAB
documents which were still under evaluation process
to the central government before 18 December 2020.
ESDM also wanted the provincial governments to give
3
 ESDM LETTER information to all coal and mineral companies in their
4
TO PROVINCIAL respective provinces which have submitted requests for
GOVERNMENT licenses and have fulfilled all of the terms and conditions
to continue the process with the Investment Coordinating
UPDATE ON THE Board (BKPM) in Jakarta. In this letter ESDM also said
MINING LAW that licensing process in coal and mineral sectors has
JUDICIAL REVIEW been re-opened since 11 December 2020 at BKPM.

ESDM letter to BKPM

IKI noticed that at the same time ESDM also sent letter
No.1482/30.01/DJB/2020 to the head of BKPM regarding
the delegation of authority in the issuance of licenses in
coal and mineral sectors as per government regulation,
and in this letter there are some major points which were
mentioned by ESDM such as:

1. Reasserting the provision of clause 173C in law no

3/2020 regarding the transfer of authority in coal and
mineral sectors from provincial governments to the
central government

2. Lifting the moratorium on the issuance of new licenses

in the coal and mineral sectors which has been applied
since June 2020.

3. Changes in the nomenclature of coal and mineral

license from Minister ESDM regulation no 25/2015 to
the nomenclature as set under law no 3/2020 and law
no 11/2020

In this letter ESDM also requested BKPM to serve

requests for licensing issuance in the coal and mineral
sectors starting 11 December 2020 as regulated in the
new mining law.

Statements from provincial governments

The ESDM office of South Kalimantan provincial

administration said they will comply with the ESDM
letter especially about the transfer mining management
authority from the provincial government to the central
government, and they will also gradually send documents
on all IUP miners in the province to the central government
4
 ESDM LETTER either in the form of softcopy or hardcopy. The South
5
TO PROVINCIAL Kalimantan ESDM office explained that there are currently
GOVERNMENT 365 IUP license miners in the province, consisting of 207
coal IUP, 19 mineral IUP, 11 non-mineral IUP, and 128
UPDATE ON THE rock IUP. It also said that the local ESDM office was still
MINING LAW waiting for statement from the central EDSM regarding
JUDICIAL REVIEW its duties and responsibilities after the removal of the
provincial government authority in the mining sector.

The ESDM office of East Kalimantan provincial government

said the ESDM letter regarding the revocation and transfer
of authority in mining management from the provincial
administration to the central government will create
new problems for the mining industry in the province
especially to the coal industry, as the licensing process
will take longer time to complete as it must go through
two government institutions, namely BKPM and ESDM. It
also said that the revocation of the provincial government
authority in the mining business will lessen government
supervision of mining activities in the province, and would
trigger the mushrooming of miners operating with fake
licenses in the future. Meanwhile, the Central Sulawesi
provincial government predicted that the revocation of the
provincial government authority in the issuance of mining
licenses will reduce provincial government income in the
future especially income from the fixed fees (land rents)
and royalty payments.
North Maluku provincial government expressed its
objection to the ESDM letter regarding the removal
of provincial government authority in the issuance of
mining licenses, also saying it will reduce the provincial
administration’s income, and will be detrimental to
the investors. The ESDM office of the North Maluku
administration said that the central ESDM letter regarding
the revocation of the provincial government authority
in the mining sector was made too early as the central
government has yet to issue derivative regulations such
as government regulation, and ministerial regulation to
implement the new mining law particularly clause 173C,
which was used as the basis by ESDM in revoking the
provincial government’s authority. The North Maluku
ESDM office also said that even though the authority in
5 mining licenses is controlled by the central government,
 ESDM LETTER the supervision and management of mining business
6
TO PROVINCIAL activities shall be controlled by the provincial government,
GOVERNMENT as it is in accordance with the regional autonomy law
which stipulates that the local/provincial government
UPDATE ON THE has right to control its own natural resources. The North
MINING LAW Maluku ESDM office also believes that this letter will
JUDICIAL REVIEW be rejected by all governors in Indonesia especially the
provinces which have the special autonomy such as
Aceh and Papua provinces.

The Aceh provincial government in its responses to the

ESDM letter said that the province will defend its privilege
in controlling the province’s natural resources including
coal and minerals as per the Helsinki agreement and also
based on the law no 11/2006 regarding Aceh Government.
The Aceh provincial government also said they have
discussed the ESDM letter with law experts in Indonesia,
and it concludes that this letter cannot be considered as
a rule and regulation in Indonesia. The Aceh government
also said the ESDM letter moves against law no 11/2006
as it negates the province’s authority in controlling
mining activities in Aceh and is also against government
regulation no 3/2015 and the Aceh’s Qanun no 15/2017.
The Aceh government also said the content of the ESDM
letter is against the legal principles which followed by
the Indonesian law where the “lex specialist derogates
legi generalist”. The Aceh provincial government also
said based on the Constitution court’s ruling no 61-PUU-
XV-2017 said that the law no.11/2006 applies specifically
for the Aceh province, therefore the existence of the
law on Aceh government cannot be changed easily like
others laws, and the process of making a law relating
to the Aceh government must involve consultation and
consideration of the Aceh legislative council as regulated
in the Indonesian Constitution clause 28 D verse 1 and
also in the clause 18 D which stipulates that Indonesia
government acknowledges and respects the distinctive
local government (provincial government) or the specialty
of the local government which are regulated by the laws.

The Aceh provincial government added that clause

173A of the new mining law no. 3/2020 states that the
provisions in the mining law are applied to the special
6 provinces in Indonesia such as Yogyakarta province,
 ESDM LETTER Jakarta province, Aceh province, Papua province, and
7
TO PROVINCIAL the West Papua province as long as the provisions are
GOVERNMENT not specifically regulated in the laws which stipulate the
privilege and specialty of these provinces, which leads
UPDATE ON THE the Aceh government to conclude that the ESDM letter
MINING LAW which negates the Aceh provincial government authority
JUDICIAL REVIEW in controlling its own natural resources is against the
privilege and specialty of the province and the letter also
removes the constitutional right of the Aceh government
and its people. Therefore, the Aceh province will not
acknowledge this letter.

The Aceh provincial government also asserted that in order

to avoid legal dispute with the central government,
and also to avoid disharmony between the two
governments, it requested for clarification from ESDM
about the letter and the Aceh government also wanted
ESDM to exclude the province from the requirements
as stated in the letter. The Aceh government also said
as the management of licensing the mineral and coal
sectors utilizes a national application system, therefore
it requested the central government to make a special
application system which will be managed by the Aceh
provincial government.

Comments from others

Indonesian coal mining association (APBI) said the transfer

of mining authority from provincial governments to the
central government is based on the new mining law as
the law makers realize that the provincial governments’
control over mining activities in the regions for almost
20 years have not been effective as seen in plenty of
mining licenses issued by the local governments that
are problematic, causing conflicts and overlapping of
concessions. APBI added the central government’s policy
of moratorium in the issuance of new mining licenses was
not affective as in some regions/provinces the number of
new mining licenses continued to increase, as somehow
the dates on the requests for the new licenses were
changed or set-back to the dates before the moratorium
policy was introduced. However, APBI also hoped that
7
 ESDM LETTER the new mechanism will not reduce the effectiveness in
8
TO PROVINCIAL the issuance mining business licenses.
GOVERNMENT
Indonesia mining advocacy network coordinator
(Jatam) said the ESDM letter does not only revoke the
UPDATE ON THE
provincial government authority in the mining sector
MINING LAW
but also removes the local governments’ involvement
JUDICIAL REVIEW
in developing and supervising mining activities in their
respective regions, which will make difficulties for the
local people to report or complaint about mining activities
due to the long distance. Jatam also said the centralized
authority will only shift corruption from the regions to
the central government as it is closer to the oligarchy
in Jakarta, and the centralized authority will eliminate
control and involvement of the local people in the
issuance of licenses in their own areas which will make
more problems and crisis for the local people. Meanwhile,
a law academician at Mulawarman university in East
Kalimantan said the ESDM letter along with the policy of
centralistic licensing system will not be good for the East
Kalimantan province as the licenses will be issued by the
central government but the negative effects of the mining
activities such as environmental damage will be borne by
the regions/provincial government, and the centralistic
system will create potential conflict between local people
and miners, which will have to be handled by the local
governments. The academician predicted that the
centralism in the mining industry will cause longer time in
the issuance of licenses as all requests for licenses from
all provinces in Indonesia will have to be submitted to the
central government in Jakarta, and this matter may boost
corruption in order to haste the process. The academician
suggested the East Kalimantan government to gather
solidarity and support from other provincial governments
which share the same views about this letter, and also
suggested the East Kalimantan government to file for
judicial review regarding the centralism issue with the
Constitutional Court.

The Center for Indonesian Resources Strategic Studies

(Cirrus) predicted the transfer of mining authority will
create more problems in the future as the government
must also provide more resources for making verification,
8 supervision and also development of the mining industry,
 ESDM LETTER and will cause delays in the issuance of licenses. If
9
TO PROVINCIAL this happens, it will trigger more “illegal” transactions
GOVERNMENT in the future, as the licenses will be given to those who
are “financially and politically” close to the authorities
UPDATE ON THE within the central government. Greenpeace Indonesia
MINING LAW said that the transfer of mining authority will make the
JUDICIAL REVIEW central government policy to be not in accordance with
the province’s environmental condition, as the local
governments have more knowledge about the province’s
situation, and it also predicted that this policy will create
more problems in the future as corruption and overlapping
cases will continue to happen.

What Next?

Director General of ESDM, Ridwan Djamaluddin, in a

meeting with the House of Representatives (DPR) said that
the draft of Presidential Regulation (PR) about delegating of
authority in mining management from central government
to local government has been completely discussed
internally at ESDM, and the Presidential Regulation draft
is waiting to be initialed by the President. ESDM also said
that the draft contains 6 major points which are:

1. The scope of authority which will be delegated to local

government
2. Type of licenses which will be delegated

3. Mining development and supervision

4. Expenses in the delegation process

5. Reporting in the delegation process

6. The revocation on the delegation authorization.

IKI noticed that in this meeting one of the House

members expressed his concern about the latest draft of
the government regulation which was shown by Ridwan
in this presentation which mentioned that the IPR and
the rock mining licenses (SIPB) will be issued by the
Ministry and or central government, and not issued
by the provincial government, as in his opinion this
9
 ESDM LETTER draft is against the clauses in the new mining law. The
10
10
TO PROVINCIAL House member also remembered that when making the
GOVERNMENT initial draft of the mining law, the government wanted that
all mining licenses, including IPR and SIPB, to be issued
UPDATE ON THE by the central government. However, this initial draft was
MINING LAW rejected by majority of the House members, which then
JUDICIAL REVIEW prompted the House to exclude the IPR and SIPB from the
central government’s authority, transferring them to local
government authority. Therefore, he requested ESDM
to revise the draft of the government regulation by
stating that the IPR and SIPB licenses will be issued
by the provincial governments.

Ridwan Djamaluddin in responding to the House member’s

statement said that based on the mining law the IPR and
SIPB licenses are still under the authority of the Ministry
of ESDM and or central government, but these licenses
will be delegated to provincial governments as stipulated
under the aforementioned Presidential Regulation, which
is currently being processed. Meanwhile, ESDM director
for mineral production and supervision, Yunus Saefulhak
said that draft of the Presidential Regulation also mentions
about the central government’s plan in controlling and
supervising mining activities in the provinces by setting
up representative offices in major mining provinces
in Indonesia, and these offices will be run by the ESDM
third echelon official or head of sub-directorate who will
also become liaison official between central government
and provincial government.

10
 ESDM LETTER Update on the Mining law judicial review
11
11
TO PROVINCIAL
GOVERNMENT In IKI’s previous reports about the mining law revision, we
have mentioned rejections coming from some provincial
UPDATE ON THE governments especially about the removal of provincial
MINING LAW government authority in the mining sector which then made
JUDICIAL REVIEW the Bangka Belitung provincial government together with
some parties contested some of the clauses in the new
mining law to the Constitutional Court, especially clauses
which negate the provincial government authorizaty,
please go to IKI 11th report edition for details.

Table 1 Update-Judicial review of new mining law

Against
Contested Date of
No Requester Review Constitutional Status
clause request
clause
Clause 1 verse 2
Clause 18A verse 2
Erzaldi Rosman
Clause 20 verse 1
1 Alirman Sori Formal 10-Jul-20 Process
Clause 20A verse 1
Tamsil Limrung
Clause 22A
Clause 22D
Clause 4 verse 2
Clause 6
Clause 7
Clause 8
Clause 21 Clause 18 verse
Bangka Belitung
2 Material Clause 48, a & b 1,2,5 & 6 13-Jul-20 Rejected
government
Clause 67 Clause 18A verse 2
Clause 100 A
Clause 169B
Clause 173
Other clauses
Constitutional Clause 18 verse 1,2,
Clause 35 verse
3 Advocate Material &5 06-Jul-20 Rejected
1&4
Association Clause 28D verse 1
Clause 18A verse 2
Clause 27
4 ART & Co law firm Material Clause 169 A 20-Jul-20 Process
Clause 33 verse 2
&3
5 Kurniawan SIP Formal Clause 22D verse 2 10-Jul-20 Process

Source: The constitutional court, compiled by IKI

In IKI’s research we found that the Constitutional Court

has rejected the Bangka Belitung government’s request
for the judicial review of some clauses as shown on the
table 1 above, reasoning that the petitioners’ requests
11 are not clear as the court could not find clause 100 A
 ESDM LETTER and the clause 169 B in the contested law, and the court
12
12
TO PROVINCIAL also said that its rejection of the petitioners’ request was
GOVERNMENT also based on the fact that the petitioners were unable
to explain about the other clauses that will negate the
UPDATE ON THE province’s authority in the mining sector. IKI also notes
MINING LAW that the Constitutional Court has also rejected the request
JUDICIAL REVIEW from the Constitutional Advocate Association, reasoning
that the petitioner was unable to explain what will be the
constitutional losses in the regard of the contested clauses
which made the court to conclude that the petitioner
doesn’t have legal standing on its judicial review to the
court.

Conclusion

IKI is not surprise with the Constitutional Court’s ruling to

reject the Bangka Belitung government’s request, as IKI
had predicted the same outcome, based on the Court’s
past rulings. IKI believes that the court will also reject the
remaining three judicial review requests as listed in the
table 1 above. IKI believes other provincial governments
also think that it will be useless to challenge this law
at the Constitutional Court especially with the Court’s
reasoning in rejecting the Bangka Belitung’s request as
IKI bolded and underlined above, and in IKI’s opinion that
is why the Bangka Belitung provincial government is not
even trying to re-submit its request to the Court.

12
 ESDM LETTER IKI had tried to ask ESDM about their response to the
13
13
TO PROVINCIAL objections of the Aceh provincial government to the
GOVERNMENT ESDM letter, and to the clauses in the new mining law
which negate the Aceh provincial authority, and ESDM
UPDATE ON THE only replied that the rejections are based on the province’s
MINING LAW special autonomy status and the solution will be based on
JUDICIAL REVIEW the administrative law which is beyond ESDM jurisdiction.

However, in IKI’s opinion that the clause 173A in the new

mining law has clearly mentioned that,

The provisions in the mining law can be applied

to some provinces which have special autonomy
as long as the provisions are not specifically
mentioned in the laws which regulate the provinces
privilege and specialty.

Which then left the question why ESDM insisted to send

the letter to Aceh government, and also who forced
ESDM to mention about the revocation authority which is
regulated by other laws as IKI underlined and bolded in
the first paragraph of this article regarding the transfer of
seven authorities, as IKI believes that this statement is far
beyond ESDM’s jurisdiction.

IKI has tried to ask to ESDM about its actual reason in

sending this letter to provincial governments instead
of waiting for the implementing regulation such as
presidential regulation and or government regulation, as
in IKI’s opinion this matter is considered very sensitive
to the provincial government, and ESDM’s only reply
was that they don’t know about the actual reason. IKI
also agrees with the concerns made by other institution
about the problems which may arise in the future if the
government forces the centralization of mining authority
at only one door (BKPM). IKI noticed that the government
has made lots of explanation in the media, downplaying
concerns of licensing delays and corruption due to this
centralized system as the government claims that all
13
 ESDM LETTER licenses will be processed using BKPM OSS system
14
14
TO PROVINCIAL which will make less interaction between applicants and
GOVERNMENT officials, and less time in the issuance of the licenses.
However, IKI remembers there was a statement from one
UPDATE ON THE of the heads of a central government institution who said
MINING LAW that he had sent request for a license since long time to
JUDICIAL REVIEW BKPM and the license was only issued after he became
the head of one of the government institutions as he
has “ability” to monitor the process, which IKI found
very interesting.

IKI believe that this matter can become more sensitive

in the future which will trigger conflict between local
governments and central government as per statement
which came from the Aceh government above, and if
the central government is unable to solve it, then conflict
between local people and mining industry will increases
as the provincial government will not attempt to mediate
and or not even try to ease the tension within the local
people which could trigger riots in the future, which IKI
has seen with the recent riot at one of the biggest smelters
in Indonesia, please go to IKI nickel for details.

14
 China government Vs Prices From
15 COAL PRICE
“The Media”

If The Outbreak Continues?

Chart 1 HBA (US$/t)

Source: ESDM, worked by IKI

ESDM has set Indonesian coal price reference (HBA)

for January 2021 at US$ 75.84/t or a 27.14% jump than
HBA in December 2020. ESDM said the increase was
caused by recovery in the global coal market especially
in China which is the biggest market for Indonesian coal,
coupled with high tension between China and Australia
governments which provided strong sentiment for the
price. ESDM added the average HBA in 2020 was
US$ 58.17/t or the lowest since 2015 which happened
because of restriction in global economic activities as the
effect of Covid-19. The price decrease was also caused
by unfavorable coal import policy in some countries and
competition with other fuels for electricity generation such
LNG, nuclear and hydro. ESDM added that the HBA has
started to recover since October 2020 caused by supply-
demand mechanism.

15
 APBI said the increase in coal price was caused by
16 COAL PRICE several factors such economic recovery in some major
coal importing countries, cooler winter in northern part of
the world, and high rainfall and high swells in Indonesia
and also cyclone weather in Australia. APBI also said that
the high tension between China and Australia has also
contribute to increasing coal demand and price. APBI
predicted that the price rally will continue until mid-2021,
which will be driven by sentiment on vaccines availabilities
together with increasing demand from importing countries
and also discipline to limit output in producing countries
. Indika said the increase price was caused by recoveries
in coal demand both in export and domestic markets
as coal still has higher share in the energy mix. Bumi
Resources expected the increase coal price will continue
until first quarter of 2021, which will affect in increasing
its production from KPC and Arutmin mines.

In IKI’s research we have found some statements from

international coal analysts saying the increase in Newcastle
price happened because of higher demand from major
importing countries including China, India, Japan and
Korea as the effect of severe winter season. The analysts
mentioned that the price increase was also caused by tight
supply in seaborne coal market as the effect of reduced
output from Colombia and Russia due to the pandemic
and winter seasons which halted coal transportation. IKI
noticed that some analysts in Indonesia said the increase
in coal price was caused by extreme winter season in
the northern part of world, economic recoveries in China
and India, and lower supply from China domestic mines
as the effect of delay in coal transport due to logistical
issues. The analysts also said the price increase was also
caused by tight coal supply due to decreasing output
from Colombia which was predicted to only supply 25.0
Mt to global market in 2020.

IKI calculated that the increase in HBA in January 2020 was

caused by an increase in both price indexes in December
2020 which formed the HBA, with IBI (International basket
indexes/Newcastle coal price) and DBI (Domestic basket
indexes/Indonesian coal price) increased respectively
by 27.14% and 30.52% m-o-m to US$ 77.68/t and US$
16 73.99/t, which leads IKI to conclude that the increase
 in HBA was mostly caused by the increase price in DBI
17 COAL PRICE which could be used as indication of higher demand for
Indonesian coal than demand for Newcastle/Australia
coal.

Chart 2 Coal export (Mt)

Source: Australian port, Indonesia government,

analyzed by IKI

IKI noticed coal export from Gladstone port in Australia

in December 2020 was 6.42 Mt or relatively stable than
export in November 2020, which consisted of exports to
Japan and Korea of 2.23 Mt and 1.37 Mt or a jump of
38.14% and 14.53% m-o-m, but exports to India and Viet
Nam decreased by 12.21% and 0.53% m-o-m. IKI also
noticed that there was no export via Gladstone to China,
which happened for the second consecutive months
as the effect of China ban on Australian coal. But coal
export from Newcastle port in December 2020 jumped
34.78% m-o-m to 14.92 Mt which was mostly caused by
the increased in sales to India, Japan and Taiwan. The
preliminary data from Indonesia government showed
the country’s coal export in December 2020 increased
by 10.1% m-o-m to 40.70 Mt, with export from Satui
increased 14.4% m-o-m to 4.9 Mt while export from
TBCT decreased 17.8% m-o-m or 4.04 Mt which can be
used as early indication that the increase in Indonesia’s
export was caused by increased export to China and
Korea, while export to India and Japan decreased due to
high competition from Australian coal.
17
 The price movements
18 COAL PRICE
IKI noticed that the price movements of both IBI and DBI
in December 2020 have shown interesting trend since
the 2nd week of December 2020 which was caused by
the sentiment on higher coal demand from China, which
then made DBI index to increase by US$ 6.0/t – US$ 7.0/t
from price in the 1st week of December, and IBI/Newcastle
price index in the same period also increased by by
around US$ 7.0/t although there was no demand from
China which IKI found as very interesting, and IKI found
Fitch Rating’s reasoning that the increase in Newcastle
price was driven by higher demand for Australian coal
from other importing countries like India, Japan, and
South Korea which could offset the absent of demand
from China.

IKI noticed that in the third week of December 2020, coal

price continued to rally with DBI index jumping by almost
US$ 8.0/t w-o-w, while IBI increased at lower rate by only
US$ 3.0/t. IKI thinks the higher increase of the DBI index
was mostly driven by the news from China about the
higher increase in power demand because of the cooler
winter and decrease in coal supply from domestic mines
due to logistical issues which made coal inventories in
some China’s major power plants to be critical situation.
The higher power demand was unable to be met by the
power producers due to low supply from hydro plants
and lower production from thermal plants due to coal
shortage which forced the China government a impose
limit on power consumption. IKI also notes there are
news reports from China which said power consumption
in some major provinces in China in December 2020
has jumped by almost 20% y-o-y due to high demand
for temperature heaters and increasing activities in the
manufacturing sector which then made China’s domestic
coal price increased significantly and hit the level of US$
100.0/t, and accordingly effect in increase coal prices
in seaborne market including price on Australia’s coal.
IKI noticed in the fourth week of December the DBI
continued the rally and increased by US$ 3.0 – US$ 4.0
per ton w-o-w, while IBI/Newcastle price decreased by
US$ 0.5/t. IKI thinks the increase of DBI was caused by
18
 higher demand from China coupled with sentiment on
19 COAL PRICE lower coal inventories at some power plants’ stockpiles
together with decreasing supply from China’s mines. IKI
also noticed the sentiment on higher power demand has
made The price movement of China’s domestic coal to
and moved outside the expectation of the utilities which
then made the China government postponed the issue
of its domestic coal price, which IKI thinks happened
as the Chinese authorities wanted to reduce the price
“bubbles” as IKI noticed there were lots of statements
from market price analysts and price assessment firms,
blaming China’s power shortage because of its ban
on Australia coal which IKI found very interesting as
again the media were playing its parts in supporting
Australian coal, and IKI will analyze this statement
in the export section. IKI found the China government
policy to postpone its index has affected in halting the
price movement especially the IBI trend as IKI noticed
that Newcastle price at the end of December 2020 was
closed to decreasing pattern, while DBI movement at the
end of December was on a rallying mode and closed at
higher level of more than US$ 81.0/t, which then leads
IKI to conclude that the increase of Indonesia price in
December 2020 was fundamentally supported by the
supply and demand situation, while the Newcastle price
movement mostly supported by the sentiment created by
the media.

Price in February 2020

IKI predicts coal price in February 2021 will decline after

the significant rally in December 2020 as China coal
demand will ease due to lunar festival which will cause
lower power demand from manufacturing and business
sectors, and IKI believes coal demand from importing
countries like Taiwan, Japan, Korea, and Viet Nam will
also decrease due to lower activities in the manufacturing
sector. However, the current high LNG price may cause
Japan, Korea, Taiwan and Thailand to increase power
production from coal plants to meet higher power demand
for heaters. IKI also predicts Indian demand for imported
coal in February 2021 will increase due to higher power
demand as IKI noticed the country’s power production
19
 in the first week of January 2021 increased 1.8% m-o-m
20 COAL PRICE which was driven by increased thermal power production
by 3.36% m-o-m which then made the country’s coal
inventories in major stockpiles declined by 2.2% m-o-m
to almost 37.0 Mt.

Meanwhile, from the supply side, IKI noticed China

government’s demand for seven major coal companies
in the country to increase coal production has given
effect to slowing down the coal price rally in the first
week of January 2021, and accordingly will provide some
pressure for price in February 2021 as supply is expected
to increase. IKI thinks coal supply from Russia in February
2021 will decrease as the effect of winter season which
will cause lower coal production and crease difficulties in
transporting coal to the ports, but production from South
Africa may be stable due to high demand from India.
IKI thinks Indonesian coal producers will try to increase
production as the current price is profitable especially
from the LRC mines, but IKI thinks production may be
challenged by the high rainfall which may still continue in
some coal producing provinces especially in South and
East Kalimantan provinces. IKI also thinks supply from
Australia is expected to decrease as the effect of the China
ban. The Australia government has also recently said that
if the China ban on Australian coal continues it will make
the Australian miners to reduce production which will
then lower their profits and decrease government income
from the coal industry as it predicted Australia thermal
coal export volume in FY (financial year) 2020 – 2021 will
decrease by almost 14.0 Mt to 199.0 Mt, which will make
the country’s income to decline by US$ 5.8 billion to US$
15.0 billion, but it forecast that the country’s thermal
coal export volume in FY 2021 – 2022 will increase by
11.56% y-o-y to 222.0 Mt, which IKI finds very interesting
as it seems the Australian government is optimistic that
the China ban will be over in March 2021.

Coal Outlook 2021

International Energy Agency (IEA) said global coal

demand in 2020 was estimated to decline by 5.0% than
20
 demand in 2019 or 7.24 Bt (billion tons) or the biggest
21 COAL PRICE decrease since the 2nd World War. IEA explained that the
decrease was caused by the Covid-19 pandemic which
reduced coal demand from power plants and industries.
IEA estimated that global power production in 2020 to
decrease by 1.5% y-o-y and with power production from
coal plants to fall by 5.2% y-o-y, and with the biggest
decrease in coal plants power production occurring in
Europe and the US by 23.0% and 18.0% y-o-y, while
coal plants power production in India, Japan and Korea
expected to decrease respectively by 4.5%, 3.2% and
10.0% y-o-y, and China power production from coal
plants in 2020 estimated to decrease only slightly, which
then made China demand for thermal coal in 2020 to be
relatively the same with demand in 2019 as shown on the
table 2 below.

Table 2. Global coal demand (Mt)

Region/countries 2018 2019 2020 E 2021 F
Asia Pacific 5,650 5,720 5,597 5,718
China 3,793 3,834 3,814 3,875
India 997 979 911 946
Japan 183 184 170 171
Southeast Asia 292 332 335 357
North America 670 583 478 526
United States 619 532 438 487
Central and South
52 53 46 45
America
Europe 799 693 588 602
European Union 595 484 386 400
Middle East 13 13 11 10
Eurasia 372 368 340 345
Russia 230 230 214 217
Africa 210 197 183 187
World 7,766 7,627 7,243 7,432
Source: IEA

IEA predicted that with the assumption of global

economic growth in 2021 of 5.2%, as predicted by IMF
(International Monetary Fund), power consumption is
projected to increase by 2.9% y-o-y and accordingly will
21
 make power production from coal plants to increase by
22 COAL PRICE 2.0% than production in 2020, which in turn will increase
global coal demand by 2.6% y-o-y to 7.43 Bt. IEA
predicted the increase in coal demand will occur mostly
in China, India, and countries in Southeast Asia due to
increase in power production in these countries and
region respectively by 3.1%, 1.0%, and 7.0% y-o-y. IEA
also predicted that in 2021 coal demand from countries
in Europe and the US will increase by 2.4% and 11.2%
y-o-y as the effect of high gas price. IEA also predicted
coal demand from Korea in 2021 will decrease by almost
5.0 Mt from demand in 2020 or 113 Mt due to decrease in
its demand for thermal coal by around 6.0 Mt to 78.0 Mt
which is in-line with Korea’s government policy to reduce
power production from coal plants and also with more
competitive cost in producing power from LNG than coal.
IEA also predicted Korea demand for coking coal in 2021
will increase by only 1.0 Mt to 35 Mt.

Chart 3 Coal production (Mt)

Source: IEA, worked by IKI

IEA predicted global coal production in 2021 will increase

by 1.84% y-o-y to 7.58 Bt with the increase in production
to occur in India, Indonesia, Australia, and North America
respectively to 771.0 Mt, 545.0 Mt, 476 Mt, and 604 Mt,
while production in China and Colombia will decrease by
0.14% and 4.6% y-o-y. IKI noticed IEA also predicted
coal production from Russia will increase by 5.0 Mt to
22
 397 Mt. IEA said its projection on China’s coal production
23 COAL PRICE in 2021 will be likely the same with 2020 or around 3.69
Bt with the assumption on China government’s program
to close some small mines in Inner Mongolia, Shaanxi,
Shanxi and Xinjiang, and replacing the small mines with
large scale-modern mines. IEA also said its projection
in the increase of Indian coal production is based on
the Indian government policy to increase domestic coal
production in bid to reduce the country’s dependency on
coal import.

The price if the outbreak continues

IKI noticed IEA’s forecasts on coal supply and demand

were likely the same with forecasts from others sources
which have already been discussed by IKI in our
previous report. IKI noticed that although IEA has yet
to mention its price expectation in 2021, but based on
its statement, IKI may conclude that IEA predicts coal
price will increase in 2021 as supply will increase at lower
rate than demand. IKI noticed Platts also forecast that
China demand for imported coal in 2021 will decrease
due to higher supply from its domestic mines, but coal
demand from other countries like the US will increase
amid recovery in the country’s economy, but Platts
predicted that coal demand from other countries may
not be enough to offset decrease in demand from
China. IKI found that Platts statement could be based on
its worst-case scenario of increasing spread of Covid-19
which will lead to re-lockdown in several countries and
will decrease power demand. However, in IKI’s opinion
if the outbreak continues to happen in 2021 it may
affect in increasing coal consumption as major coal
consumers in the world like China, India, Japan, Thailand,
and Indonesia, and even the Korean government will
increase power production from coal plants, and IKI
prediction is based on the facts that some countries have
already experienced huge income deficits and facing
severe liquidity problems in 2020 because of Covid-19,
and if the outbreak continues it will force these countries
to increase power production from coal plants to avoid
greater deficits.

23
 COAL ESDM Production
24 PRODUCTION

Coal Production Quota

by Province in 2021

Chart 4 Coal production (Mt)

Source: ESDM, worked by IKI

Temporary data from ESDM showed coal production in

November and December 2020 respectively stood at
47.57 Mt and 43.58 Mt or decreased by 8.7% and 5.0%
y-o-y, making total coal production for the full year at
557.0 Mt or a decrease of 9.6% than production in 2019,
but 7.0 Mt above ESDM’s 2020 production target of 550
Mt. Meanwhile, ESDM in its latest statement said coal
production in the first 11 months of 2020 was 508.0 Mt
– 510.0 Mt or decreased by 11.0% than production in
the same period of 2019, and the decrease happened
mostly because of the Covid-19 pandemic effect which
had reduced coal demand, and decreased coal prices.
The large-scale social restrictions (PSBB) imposed by
the government in a bid to help reduce the spread of
the coronavirus has hampered logistics and mobility of
mining workers to increase production. ESDM also said
that the pandemic has caused greater effect to miners
producing low rank coal as majority of these miners
don’t have long-term agreement with the buyers, and the

24
 COAL decrease in coal price has forced these miners to lower
25 PRODUCTION
or even halt production as their mining costs were higher
than selling price.
Coal Production Quota
by Province in 2021 ESDM said that realized government income from the
coal and mineral sectors until first week of December
2020 was IDR 32.93 trillion, which was IDR 1.5 trillion
above the government revised income target in 2020,
which happened as ESDM was able to increase efficiency
in collecting royalties through its e-PNBP system. But, IKI
notes that The Indonesia government said income from
royalties in coal and mineral sectors until end of November
2020 was IDR 18.94 trillion or accounted for 97.87% of
the government target in 2020 as the effect of increasing
HBA in the past two months and rising gold prices,
and also higher income from nickel sector. However,
the government’s income from coal and mineral sales
in the same period fell 26.63% y-o-y or only IDR 11.01
trillion due to lower coal sales as the effect of Covid-19
pandemic.

ESDM target in 2021

ESDM’s Director General of Coal and Minerals, Ridwan

Djamaludin in his latest formal statement said total coal
production in 2020 was 561.0 Mt or 11.0 Mt higher than
the government’s target, with coal sales in domestic
market at 132.0 Mt or only 85% of the government’s
target of 155.0 Mt. ESDM also said realized government
non-tax revenue (PNBP) from the coal and mineral sector
in 2020 was IDR 34.6 trillion or a decrease of 22.94%
y-o-y, while realized investment in the mining sector in
2020 was US$ 4.02 billion or only accounting for 61.85%
of the realized investment in 2019 as the Covid-19 has
hampered investment activities due to restriction in
mobility of people and goods, difficulties in procurement
of materials for construction and also difficulties in funding
as some companies have halted their expenses due to
the uncertain economic condition.

ESDM is targeting coal production in 2021 to reach 550.0

Mt, of which 137.5 Mt will be allocated for domestic
25
 COAL market and the rest for export market. ESDM in its
26 PRODUCTION conversation with IKI said it has set coal production
quota for provinces in Indonesia with the biggest quota of
Coal Production Quota 351.44 Mt or 63.90% of the production target will under
by Province in 2021
central government authorization, while the remainder
will be allocated to each of the producing provinces in
Indonesia as shown on the table 3 below

Table 3. Coal production quota (Mt)

Change
No Production quota 2021 2020
(%)
1 Central Government 351.44 340 3.4%
2 East Kalimantan 77.53 82.15 -5.6%
3 South Kalimantan 60.8 64.83 -6.2%
4 South Sumatra 18.15 19.96 -9.1%
5 North Kalimantan 11.15 10.53 5.9%
6 Jambi 10.2 8.54 19.4%
7 Aceh 9.8 7.1 38.0%
8 Central Kalimantan 6.3 8.51 -26.0%
9 Bengkulu 2.75 6.1 -54.9%
10 Riau 1.38 1.56 -11.5%
11 West Sumatra 0.5 0.66 -24.2%
Total 550 550 0.0%
Source: ESDM, worked by IKI

ESDM also said it is targeting PNBP income (non-tax

revenue) to increase by 13.0% y-o-y to IDR 39.1 trillion,
and ESDM is also targeting investment in coal and mineral
sector in 2021 to reach US$ 6.0 billion or increasing by
almost US$ 2.0 billion than realized investment in 2020,
with US$ 2.23 billion to come from the nickel sector. ESDM
also said it is targeting three government regulations
which needed as implementing rules of the new mining
law will be issued in 2021 including government regulation
regarding mining business activities, government
regulation about mining areas and also government
regulation about development and supervision of
reclamation and post-mining activities. ESDM said it is
also targeting to complete presidential regulation about
delegation of mining authority to provincial governments.

26
 COAL IKI found out that ESDM’s coal production target in 2021
27 PRODUCTION of 550.0 Mt may have come from its prediction of low case
scenario with the assumption of decreasing coal demand
Coal Production Quota in the export market due to importing countries policies to
by Province in 2021
reduce power production from coal plants coupled with
policies in China and India to utilize their own domestic
coal production. However, IKI finds ESDM’s target of
13.0% y-o-y increase in the state non-tax revenue (PNBP)
from the coal and miner sector to be in contrast with
its coal production target. Even assuming an increase
in coal price in 2021, it will be quite challenging for the
government to get PNBP income of IDR 39.1 trillion as IKI
thinks the coal sector is still the largest contributor to the
PNBP than other mining commodities, which leads IKI to
conclude that the government will revise its production
target in 2021, and IKI’s conclusion is also supported
by the coal mining industry players as IKI quoted in our
market news below:

Market News

• Directorate of general taxation of East Kalimantan

said the province revenue from tax sector in 2020
was only IDR 16.2 trillion or 87.9% of its target which
happened because of decreasing income from the
coal sector due to lower volume of coal sales both in
East and North Kalimantan, but the directorate general
also said tax’s collect from Balikpapan and Bontang
region respectively reached 103.3% and 102.0% of
the targets.
• South Kalimantan provincial government said the
province’s coal sales volume in the first 9 months of
2020 was 44.7 Mt or lower by around 6.0 Mt than sales
in the same period of 2019 due to lower demand as
some coal customers in the domestic market closed
down their operations due to the Covid-19 pandemic.
The provincial government also said the lower coal
sales will reduce the province’s income from profit
sharing in the coal and mineral sector by IDR 0.3
trillion or only IDR 0.7 trillion.

27
 COAL • Central Kalimantan provincial government said mining
28 PRODUCTION royalty revenue in the province in January – November
2020 totaled IDR 1.5 trillion which was IDR 0.5 trillion
Coal Production Quota higher than its target of IDR 0.98 trillion, due to better
by Province in 2021
weather condition which has allowed for higher
shipment and sales volume of coal and iron ore.
• Bumi Resources said the company’s coal production
in 2020 was estimated at 83.0 Mt – 85.0 Mt or about
the same with production in 2019 as the company was
able to reduce its cost in a low price situation due to
Covid-19. Bumi also said it’s targeting production in
2021 of around 85.0 Mt – 90.0 Mt with expectation of
higher coal demand in 2021 due to vaccine availabilities
and reduced geo-political tension with the result of the
US presidential election, and the company also said
it plans to focus on increasing coal sales to domestic
markets.
• Bayan Resources has set coal production target in
2021 of 32.0 Mt – 34.0 Mt, which is an increase by
almost 4.0 Mt than production in 2020, of which 26.8
Mt – 27.8 Mt will be produced from its Bara Tabang
mines, from TSA/FKP mines at 3.0 Mt – 3.4 Mt, Wahana
mines 1.2 Mt – 1.6 Mt and PIK mine will produce 1.0
Mt – 1.2 Mt. Bayan also claimed that within January
2021 the company has secured coal sales of around
27.2 Mt for its 4,500 GCV with 25% of the total sales
are based on fixed price or US$ 36.0/t, while 75% will
be using index prices
• ABM Investama is targeting coal production from
its mines in Aceh and South Kalimantan in 2021 to
reach around 13.0 Mt or an increase by 13% than
its target in 2020 as it predicted coal demand from
major importing countries like China, India, Viet Nam,
Malaysia and Philippine will increase due to the global
economic recovery and the vaccines availability will
give positive sentiments to coal price.
• Golden Eagle Energy said its coal production and sales
in the first 9 months of 2020 was 0.88 Kt and 0.87 Kt
or decreased respectively by 36.0% and 38.0% y-o-y
as the effect of Covid-19, and expected overall coal
production in 2020 to reach 1.3 Mt or only 82% of its
28
 COAL initial target for the year. The company also said its
29 PRODUCTION production target in 2021 is 2.0 Mt or an increase of
15.0% y-o-y, and the company will be focusing on
Coal Production Quota selling its coal to the domestic market especially to
by Province in 2021
power plants and in order to reduce the effect of price
volatilities, the company will make its price mechanism
based on spot price and HBA.
• PTT of Thailand said the company plans to close
permanently three coal companies this year, which
are under the control of Sakari Resources. The three
companies are Reyka Wahana Digdjaya Pte. Ltd which
is engaged in coal business investment and based in
Singapore, Sakari Energy Pte. Ltd based in Singapore
also engaged in coal investment, and PT. Tri Tunggal
Lestari Bersama which is based in Indonesia with
business line in the port sector. PTT said the closure
of these three companies has been approved in the
board meeting.
• PT United Tractor said its coal production target from
the mining contractor business in 2021 will be likely
same with its 2020 target of around 110.0 Mt in the high
case scenario, but in the best case scenario production
may decrease by 5.0% y-o-y with the assumption
there are no demand to increase production from
its clients. But the company has prepared capex of
around US$ 290.0 million in 2021 or a jump by almost
US$ 100.0 million from realized capex in 2020 and will
be used primarily for heavy equipment refurbihsment.
• Delta Dunia Makmur, a mining contractors, said it’s
prepared capex of around US$ 100 million in 2021 or
increasing by almost four times than realized capex
in 2020 as the company is optimistic that its coal
production in 2021 will be better due to increasing
coal price. Delta also said the company is targeting to
sign new mining contracts this year.
• PT Petrosea said the company ‘s revenues in the first
9 months of 2020 fell by 34.01% y-o-y or almost US$
250.0 million as coal production and overburden
removal volume decreased by 22.2% and 29.04%

29
 COAL y-o-y to 19.1 Mt and 68.8 Mbcm. Its coal production
30 PRODUCTION and overburden removal volume in 2021 is targeted
to increase by 16.0% and 20% y-o-y to 30.0 Mt and
Coal Production Quota 118.0 Mbcm. Petrosea also said the company will
by Province in 2021
prepare capex of around US$ 100.0 million in 2021
or a jump by almost five times than realized capex in
2020.
• Anzawara Satria said that the local police department
has stopped illegal mining activities at its mining
concession and arrested three mine workers and
seized two excavators. IKI noticed illegal mining
activities have also happened at PT Sumber Kurnia
Buana concession which causes the water dam in the
mining area to collapse and caused flood affecting the
local people.
• PT Intraco Penta expected its heavy equipment sales
in 2021 to increase by 10.0% - 15.0% than 2020
driven by higher heavy equipment demand from
coal and nickel industries as it predicted price of
both commodities to rise in 2021 due to increasing
demand for coal and nickel from export and domestic
markets. Meanwhile, PT Hexindo Adiperkasa sees
heavy equipment business will be better in 2021 due
to higher demand from coal and agriculture sectors,
while demand from infrastructure sector is expected
to be stable. The company targets sales in 2021 to
increase by 20.0% - 30.0% y-o-y.

Merger and Acquisition

• Thai-based Lanna group said talks to acquire majority

shares in East Kalimantan coal miner PT Pesona
Khatulistiwa Nusantara (PKN) have been re-extended
from 31 December 2020 to 31 March 2021 due to the
lingering Covid-19 pandemic situation in Thailand
and Indonesia. IKI notes that the acquisition talks
have started since 2018 with Lanna planning to buy
around 60% of PKN shares with total value of US$
26.0 million.

30
 INDONESIA COAL
31 EXPORT 1 Indonesia Export

China’s Situation, Temporary data of ESDM showed that in November 2020

The Increase in Indonesia exported coal of 26.54 Mt or increased 3.27%
Power Price? m-o-m, making total export volume in the first 11 months
of 2020 of 291.66 Mt or falling 30.16% y-o-y. Meanwhile,
in a webinar which was attended by IKI, ESDM said that
coal export in November 2020 was 37.0 Mt, and total
coal export from January – November 2020 was 364.0 Mt
or decreased by 13% y-o-y and with total export value of
around US$ 19.86 billion or falling 25.0% y-o-y. ESDM
said the decrease was caused by the pandemic which
reduced coal sales to some countries especially India and
Korea which fell 20% and 15% y-o-y, and compounded
by policy of major importing countries like China and
India which prefer to consume domestic coal production.
ESDM also said it projected that overall coal export in
2020 to decrease by 14.0% y-o-y or 392.4 Mt.

31
 INDONESIA COAL ESDM predicted coal export in 2021 will increase due to
32 EXPORT recovery in the global economy condition and availability
of Covid-19 vaccines, expecting higher demand from
China’s Situation, Pakistan, Bangladesh, the Philippines, Malaysia, and
The Increase in
Viet Nam. ESDM also predicted coal export to China
Power Price?
will increase to almost 202.30 Mt due to China’s ban
of Australian coal and the coal purchasing agreement
between APBI and CCTDA which was signed in November
2020. Meanwhile, Indian demand for imported coal
may decrease as the Indian government is targeting to
replace 100 Mt of imported coal with domestic coal in the
FY20/21 (financial year) and in FY21/22 around 150 Mt
of imported coal will be replaced by the domestic coal.
Therefore, ESDM forecast that total coal export in 2021
will be around 406.30 Mt – 427.0 Mt or an increase of
3.54% - 8.82% than export in 2020.

Chart 5 Indonesia Coal Export (Mt)

Source: Government institution, worked by IKI

IKI calculated coal export in November 2020 was 36.98

Mt or jumped by 15.17% than export in October 2020,
which consisted of export of high grade, medium grade
and LRC of 5.87 Mt, 21.36 Mt and 9.75 Mt or increase
respectively 2.08%, 11.60% and 35.09% m-o-m. IKI
also calculated total export value in the same month
was US$ 1.42 billion or increased by 22.60% m-o-m
due to increase in coal prices and also increase in export
volume. IKI also noticed that export of LRC in November
32
 INDONESIA COAL 2020 jumped significantly than other types of coal which
33 EXPORT happened mostly because of higher coal price paid by
major importing countries like China and India which had
China’s Situation, to increase their buying to LRC to control expenses.
The Increase in
Power Price? IKI also calculated total coal export in the first 11 months
of 2020 was 366.30 Mt or decreased by 13.23% y-o-y
which happened because of decreased export to China,
India, Korea, and Taiwan, but IKI noticed that export to
third countries like Brunei Darussalam, Cambodia, New
Zealand, and Pakistan increased respectively by 136.0%,
10.3%, 23.44%, and 1.21% y-o-y to 1.05 Mt, 2.65 Mt,
1.05 Mt and 3.09 Mt. IKI noticed majority of export to
Brunei Darussalam came from KPC mines with the
average price of US$ 44.25/t while export to Cambodia
was dominated by coal from Etika Sumber Alam’s mines
and also PTBA with the average price of US$ 41.4/t. IKI
also found that export to New Zealand mostly came from
Kideco, Jembayan, Adaro, and Baramulti mines with the
average selling price respectively at US$ 45.84/t, US$
48.44/t, US$ 48.81/t and US$ 47.15/t, while export to
Pakistan was dominated by coal from STC, Bayan group,
PTBA, and Berau Coal with the average selling price
respectively at US$ 49.03/t, US$ 35.85/t, US$ 54.05/t
and US$ 43.96/t.
1.1 Export by province
Table 4 Export by province (Mt)

Province Nov-20 Oct-20 m-o-m Nov-19 y-o-y

East Kalimantan 21.11 19.30 9.4% 20.33 3.9%
South Kalimantan 10.97 8.96 22.4% 13.23 -17.1%
North Kalimantan 1.61 1.31 22.9% 1.82 -11.7%
South Sumatra 1.09 1.15 -5.2% 1.84 -40.7%
Lampung 1.18 0.62 89.7% 0.38 212.0%
Aceh 0.77 0.52 48.1% 0.66 16.6%
Jambi 0.04 0.09 -49.2% 0.18 -75.4%
Bengkulu 0.20 0.14 39.7% 0.22 -9.0%
Central Kalimantan 0.01 0.02 -43.4% 0.03 -65.5%
Riau
West Sumatra
Total 36.98 32.11 15.2% 38.68 -4.4%
33 Source: Indonesia government worked by IKI
 INDONESIA COAL In the month of November 2020 almost all coal producing
34 EXPORT provinces in Indonesia saw higher coal sales volume to
overseas, except export from Jambi, South Sumatra
China’s Situation, and Central Kalimantan which decreased respectively
The Increase in
by 49.2%, 5.2% and 43.4% m-o-m. IKI noticed the
Power Price?
decrease in export from Jambi province was mostly
caused by reduced output of medium grade coal from
KBM mines by 54.75% or only 34.94 Kt due to higher
rainfall. Meanwhile, Jambi’s export of LRC increased
slightly 3.81% m-o-m to 8.38 Kt, and IKI also calculated
the average selling price of KBM’s coal in the same
month decreased by almost US$ 1.0/t to US$ 40.03/t,
but Jambi’s export price of LRC was relatively stable
at the level of US$ 18.25/t. However, Jambi provincial
government said that the province’s export in November
2020 increased 10.67% m-o-m to US$ 163.76 million
which was driven by an increase in the province’s export
of agriculture commodities, but the province’s coal export
in the same month plummeted 71.80% m-o-m or US$
0.93 million with majority of its coal were exported to
Malaysian with the values of US$ 0.78 million. IKI thinks
export from this province will increase in the first quarter
of 2021 which will be driven by LRC demand from India
and also demand from other countries in Southeast Asia.

IKI noticed coal export from South Sumatra decreased by

5.2% m-o-m to 1.09 Mt which was caused by lower sales
to India, Malaysia and Cambodia by 47.98%, 10.45%
and 6.27% m-o-m, but exports to China, Taiwan, and the
Philippines increased to 0.20 Mt, 0.11 Mt and 60.50 Kt,
respectively. The South Sumatra provincial government
said the province’s export values in November 2020
decrease by 8.53% m-o-m or US$ 304.2 million, and
with coal export only accounted for13.78% of the total
export or around US$ 41.89 million. The South Sumatra
provincial government also said total export from this
province in January – November 2020 was US$ 3.21
billion or decreased 13.59% y-o-y, with coal export value
falling by 34.5% y-o-y to US$ 0.46 billion. Bank Indonesia
in South Sumatra Province predicted that the province’s
economic growth in 2021 will increase to the level of

34
 INDONESIA COAL 4.9% - 5.1% with the assumption of rising consumption
35 EXPORT and increase income from export commodities especially
coal, rubber and CPO due to high demand.
China’s Situation,
The Increase in IKI noticed coal export from South Kalimantan increased
Power Price? by 22.4% m-o-m to 10.97 Mt which consisted of export
of medium grade coal and LRC of 3.64 Mt and 5.56 Mt
or increased 18.1% and 39.7% m-o-m, but its export of
high grade coal decreased 7.2% m-o-m to 1.76 Mt. IKI
noticed the huge increase in the LRC export was caused
by higher output from mines in Banjarmasin, Satui and
Kotabaru areas which IKI will discuss further in the
infrastructure section. Meanwhile, export of LRC from
Asam – Asam area which were produced from Anugerah
Lumbung Energy mine fell by 47.89% m-o-m or only 66.0
Kt. IKI also noticed that the increase in South Kalimantan
medium grade export was mostly caused by increased
in Arutmin coal shipment to overseas up to 0.45 Mt or
almost double than Arutmin’s export in October 2020,
while export of medium grade coal from Adaro was
relatively stable and with decrease in export from STC
mines. IKI noticed lower export of high grade coal from
South Kalimantan was mostly caused by lower sales
from mines in Banjarmasin and Kotabaru, while export
of bituminous coal from Arutmin and Wahana mines
increased to 0.32 Mt and 0.15 Mt.

The coal export from North Kalimantan in November

2020 increased 22.9% m-o-m to 1.61 Mt which consisted
of sales of medium grade and LRC of 1.26 Mt and
0.18 Mt or increased 33.28% and 56.61% m-o-m, but
the province’s export of high grade coal fell 33.65% to
0.16 Mt. IKI noticed the increase in medium grade coal
export was mostly driven by higher output from mines in
the Tarakan port areas which will be discussed by IKI in
the infrastructure section, and the huge increase in LRC
export was caused by higher coal sales from PKN mine by
113% m-o-m to 0.12 Mt, but LRC sales from Adani mines
were relatively stable at 63.25 Kt, and IKI also noticed
the huge export of PKN coal has made the company
able to negotiate for an increase in price by US$ 2.62/t
to US$ 18.77/t, while Adani price only increased by US$
1.05/t to US$ 13.05/t. IKI noticed the decrease in its high
35 grade export was caused by lower output from Baramulti
 INDONESIA COAL mine while sales from Medco mine jumped by almost six
36 EXPORT times to 0.11 Mt. Despite of the higher export volume
from Medco mines, the company’s average selling price
China’s Situation, decreased by US$ 2.0/t to US$ 48.05/t which IKI thinks
The Increase in
happened as in November 2020, Medco increased its
Power Price?
sales to Indian market which preferred lower price than
other countries.

IKI noticed export from Bangkulu province jumped by

39.7% m-o-m to 0.20 Mt which consisted of export of high
grade coal which were majority produced from Injatama
mines of 18.34 Kt or falling 55.9% m-o-m, and with the
price of US$ 48.83/t or relatively stable than price in
October 2020. Meanwhile, export of medium grade coal
mostly produced from CDE mines increased by 78.66%
m-o-m to 0.18 Mt which happened because of increased
sales to India, Philippine, Taiwan and Thailand, and IKI
noticed the huge increase in price of medium grade coal
has made the average export price to increase by US$
1.60/t to US$ 38.30/t.

Coal export from Aceh province jumped 48.1% m-o-m to

0.77 Mt which was mostly caused by increased LRC sales
to India and Viet Nam to 0.67 Mt and 0.10 Mt with average
price of US$ 18.96/t or increased by US$ 1.32/t. Aceh
provincial government said the province’s total export in
the month of November 2020 was US$ 23.45 million or
increase 36.60% m-o-m, and the increase was caused by
increase export of coal commodities by 59.13% m-o-m
to US$ 14.55 million. The Aceh government also said
the province’s total coal export in January – November
2020 was US$ 135.68 million or decreased 3.91% y-o-y.
IKI thinks the province coal export in Q1-21 will increase
due to high demand from India, however recent weather
forecast from BMKG said high swell and increase rain
intensity will happen in the West part of Aceh province
which will cause a decrease in coal export due to delay
in coal shipment.

36
 INDONESIA COAL 1.2 Export to major countries
37 EXPORT

China’s Situation,
The Increase in
Power Price?

Table 5 Export to major countries (Mt)

Growth
No Country Nov-20 Oct-20 m-o-m Jan - Nov 20
(y-o-y)
1 China 11.00 6.17 78.2% 109.79 -19.9%
2 India 9.45 10.40 -9.2% 89.17 -20.4%
3 Philippines 2.50 2.57 -2.9% 26.32 4.7%
4 South Korea 1.49 2.32 -35.7% 23.05 -15.2%
5 Japan 2.27 1.75 29.3% 24.81 -1.9%
6 Malaysia 2.47 2.40 3.0% 24.56 4.4%
7 Taiwan 1.56 1.42 9.5% 16.35 -10.6%
8 Viet Nam 1.56 1.66 -6.4% 16.92 24.8%
9 Thailand 1.54 1.34 15.0% 15.42 -7.2%
10 Bangladesh 1.60 0.96 66.6% 6.03 17.0%
Source: Indonesia government worked by IKI

The increase in coal export in November 2020 was mostly

caused by increased sales to China by 78.2% m-o-m
to almost 11.0 Mt, which happened as the effect of the
China government’s ban on Australia coal which made
China’s buyers shifted coal demand to other countries
especially Indonesia. IKI noticed majority of exported
coal from Indonesia to China was medium grade and LRC
with quantity of 4.84 Mt and 5.91 Mt, but export of high
grade coal fell by 20.87% m-o-m or only 0.25 Mt, and the
export of high grade coal mostly came from Berau Coal,
Adaro, Wahana, and Arutmin mines. IKI also noticed that
majority of the exported LRC to China came from Kideco,
BIB, BMB, AGM, SDJ, TBR, and Jhonline mines with
quantity respectively 1.12 Mt, 1.07 Mt, 0.38 Mt, 0.31 Mt,
0.36 Mt and 0.48 Mt, while the exported medium grade
coal mostly came from KPC, PTBA, Berau Coal, MIP,
ITMG and GBU of 1.50 Mt, 0.66 Mt, 0.47 Mt, 0.27 Mt,
0.30 Mt and 0.13 Mt. IKI also calculated that the average
China buying price of Indonesian coal in November 2020
37
 INDONESIA COAL was US$ 34.51/t or increased by US$ 4.60/t than price in
38 EXPORT October 2020, and the increase was driven by increased
coal price index together with increased export of medium
China’s Situation, grade coal by almost 135.0% m-o-m.
The Increase in
Power Price? The coal export to Bangladesh jumped by 66.6% m-o-m
to 1.60 Mt which came from Berau Coal, Bayan, ITMG,
ABN, MHU, MSJ, KE and Alhasanie mines of 0.71 Mt, 0.18
Mt, 0.27 Mt, 0.11 Mt, 0.11 Mt, 55.0 Kt, 55.2 Kt, and 45.04
Kt, and IKI also calculated the average price of exported
coal to Bangladesh was US$ 43.30/t or increased by US$
3.15/t which happened as the Bangladesh buyer was
buying high grade coal from ITMG with the average price
of US$ 46.50/t. IKI noticed export to Thailand increased
by 15.0% m-o-m to 1.54 Mt which consisted of export
of high grade coal of 0.22 Mt or decreased by 35.84%
m-o-m which were mostly produced from KPC, ITMG,
and MUTU mines with quantity respectively 52.50 Kt,
60.79 Kt, and 55.0 Kt, and Indonesia export of LRC to
Thailand also decreased by 1.33% m-o-m or 0.27 Mt
which were produced from PKN, Indexim and LG mines.
But, export of medium grade coal to Thailand jumped
46.33% m-o-m to 1.04 Mt which came from Adaro, ABK,
MSJ, SP, ABN, IPC, CDE, PTBA and KPC respectively at
0.17 Mt, 0.17 Mt, 0.11 Mt, 0.18 Mt, 53.41 Kt, 59.80 Kt,
20.42 Kt, 52.70 Kt and 60.50 Kt. IKI also calculated that
the average price of coal export to Thailand was down
by US$ 2.70/t to US$ 35.97/t which happened because
of decreased export of high grade coal produced from
ITMG mines.

IKI also noticed that export to Japan jumped 29.3%

m-o-m to 2.27 Mt which IKI thinks happened because of
increased export of coking coal and thermal coal as IKI
noticed that sales from Maruwai Coal which produced
coking coal to Japan jumped 95.2% m-o-m to 53.10
Kt together with export of high grade coal which were
produced from PMM, ABB, MGM, Baramulti, KPC,
Arutmin, ITMG, KIdeco, ABK, and GBU with the volume
respectively at 85.50 Kt, 0.20 Mt, 0.15 Mt, 89.37 Kt, 0.51
Mt, 0.23 Mt, 0.40 Mt, 92.56 Kt, 51.10 Kt and 65.0 Kt. IKI
calculated the price of coking coal export to Japan was
US$ 91.0/t which was relatively the same with price in
38 October 2020, while the average price of thermal coal
 INDONESIA COAL was US$ 51.20/t or increased by almost US$ 4.0/t m-o-m
39 EXPORT due to increased export volume from KPC, Arutmin and
ITMG which have always sold coal with higher price than
China’s Situation, other producers.
The Increase in
Power Price? However, IKI noticed export in November 2020 to some
countries like Korea, India, Viet Nam, and Philippine
decreased which happened because of lower power
production from coal plants due to increased power
production from hydro plants as happened in Viet Nam
and Philippines, together with increased supply of
Australian coal due to China’s ban which made countries
like India, and Korea increased their buying of Australia
coal which IKI thinks mostly driven by political issues
rather than demand. IKI noticed export to Korea suffered
the biggest fall of 35.70% m-o-m or 1.49 Mt which
happened because of the Korea’s government policy
to reduce power production from coal plants due to the
environmental issues which then made the Korean utilities
reduce their appetites on coal which were produced
by KPC and Kideco by 60.51% and 43.07% m-o-m or
only 0.16 Mt and 82.50 Kt, and the Korean traders also
reduced their buying from miners in Samarinda areas to
only one vessel with the quantity of 76.60 Kt, and with
no buying activities for BIB’s coal, but IKI noticed Korean
traders increased their buying of Adaro and Bayan’s coal
to 0.53 Mt and 0.45 Mt with the average price of US$
37.59/t and US$ 34.40/t.

39
 INDONESIA COAL
40 EXPORT 2 Coal Export from other Countries

China’s Situation, 2.1 South Africa Export

The Increase in
Power Price?

Chart 6 South Africa export (Mt)

Source: South Africa government, worked by IKI

IKI calculated South Africa coal export in November

2020 was 6.43 Mt or decreased by 9.59% m-o-m which
consisted of exports to India and Pakistan of 3.88 Mt
and 1.06 Mt or declined by 1.2% and 19.0% m-o-m,
but exports to Sri Lanka, UAE, Bangladesh and Taiwan
increased respectively to 0.30 Mt, 0.29 Mt, 0.21 Mt and
0.17 Mt, and IKI also noticed in November 2020 South
Africa did not export coal to Viet Nam, Israel and Turkey
because of lower coal demand as these countries
preferred to buy coal from other countries like Indonesia
and Russia. IKI also noticed the South Africa export
performance in November 2020 confirms IKI’s statement
in our previous report that the ban on Australia coal by
China will not increase coal supply from South Africa to
China as per data from South Africa government showed
that no coal export was made from South Africa to China
in November 2020. IKI also noticed despite of the increase
in coal price in Asia and Africa markets in November
2020, overall price of exported coal from South Africa in
November 2020 was US$ 54.00/t or relatively stable than
price in October 2020, and with its average price to India
40
 INDONESIA COAL and Sri Lanka of US$ 53.60/t and US$ 60.05/t which fell
41 EXPORT by US$ 1.39/t and US$ 0.15/t, while prices to Pakistan,
Bangladesh, UAE, and Taiwan were respectively averaged
China’s Situation, at US$ 53.86/t, US$ 38.96, US$ 63.63/t, and US$ 68.98/t.
The Increase in
Power Price?

Table 6 Export to countries (Mt)

Jan - Nov Growth
Country Jan - Nov 2019
2020 (y-o-y)
India 35.15 39.36 -10.68%
Viet Nam 7.16 2.28 214.52%
Pakistan 11.03 11.12 -0.82%
Sri Lanka 2.06 1.43 44.55%
South Korea 1.43 3.70 -61.35%
United Arab Emirates 1.60 1.29 24.63%
Taiwan 1.04 1.14 -8.50%
Other 9.02 11.99 -24.72%
Total 68.50 72.29 -5.25%

Source: South Africa government, worked by IKI

IKI also calculated total export from South Africa until

November 2020 was 68.50 Mt or decreased by 5.25%
y-o-y which was caused by lower export to India due to
the country’s lockdown by almost 2 months because of
the Covid-19. Its export to Korea fell by 61.35% y-o-y to
only 1.43 Mt which was related to the Korean government
policy of reducing power production from coal plants due
to environmental issues, and its exports to Taiwan and
Pakistan decreased by 8.50% and 0.82% y-o-y or 1.04
Mt and 11.03 Mt as the effect of lower power production
from coal plants. However, South Africa’s export to Viet
Nam jumped by more than three times as the lockdown
in India made the South African miners shifted their coal
sales to Viet Nam but with special prices. IKI predicts
coal supply from South Africa in the next few months will
be under pressure due to increasing coal supply from
Australia which have better quality coal and also more
supply from Indonesia which have cheaper price and low
ash.
41
 INDONESIA COAL South32 said it was targeting that the sale of its South
42 EXPORT Africa coal assets to Seriti Resources can be completed
within the first quarter of 2021 as the South Africa’s
China’s Situation, antitrust tribunal has given its approval on the transaction,
The Increase in
and as South32 is waiting for approval from Eskom, which
Power Price?
is the largest thermal coal customer in South Africa, as
South32 has agreement to supply coal to Eskom. The
Anglo American said that it’s targeting to sell its South
African coal assets in 2023 as the company plans to shift
its business to clean energy sources and also focusing
its activities on mineral commodities. Meanwhile, South
Africa Standard Bank has announced a new policy of
giving loans to thermal coal projects in the country, and
under this new policy the bank will only finance coal
projects which comply with international convention
about greenhouse gas emission and the environment
such as the Equator Principles. The Standard Bank said
that the company cannot swiftly stop its financing to the
coal industry as it will cause lots of harm to the South
African economy as more than 80% of the country’s
power consumption are fulfilled by coal plants.

2.2 Russian Rxport

Chart 7 Russian coal export (Mt)

Source: Russia government, worked by IKI

IKI calculated Russian coal export in November 2020

jumped 24.87% m-o-m to 18.28 Mt which was caused
by increased exports to major Asian countries like China,
42
 INDONESIA COAL Japan, Turkey, Taiwan, and India respectively by 31.0%,
43 EXPORT 43.14%, 18.67%, 15.02%, and 106.0% m-o-m to 3.13
Mt, 2.18 Mt, 1.30 Mt, 1.13 Mt, and 0.67 Mt, but exports
China’s Situation, to Korea and Viet Nam decreased slightly by 2.66% and
The Increase in
3.09% m-o-m or 2.03 Mt and 0.55 Mt. IKI noticed Russia’s
Power Price?
exports also increased to major European countries like
Poland, Ukraine, Netherland, German, and Italy to 1.15
Mt, 1.06 Mt, 0.72 Mt, 0.58 Mt, and 0.44 Mt, but export
to France slumped 27.40% m-o-m or only 0.22 Mt. IKI
then concluded the huge increase in Russian export
in November 2020 was driven by higher demand from
Asian and European markets due to winter season, lower
power supply from renewables, and also higher LNG
price which made countries to increase power production
from coal plants. IKI noticed that China’s ban on Australia
coal has yet to cause much affect in increasing Russian
export to China which IKI thinks because of the lower
China demand for Russian high grade coal especially
coking coal as IKI noticed the increase in Russian export
to China in November 2020 was mostly driven by the
increase in LRC sales by 131.3% m-o-m to 0.67 Mt
with the average price of US$ 32.24/t, while its export
of high grade coal increased by only 17.18% to 2.46 Mt.
IKI thinks Russian export in February 2021 will decrease
due to lower demand from China, Taiwan, Japan, and
Viet Nam.

Table 7 Export to countries (Mt)

Jan - Nov Jan - Nov Growth
Country
20 19 (y-o-y)
Korea 24.05 25.60 -6.04%
China 33.71 30.47 10.62%
Japan 19.69 18.07 8.94%
German 8.72 19.79 -55.91%
Poland 8.67 9.85 -12.00%
Turkey 13.00 8.73 48.83%
Netherland 8.98 12.22 -26.52%
Viet Nam 7.01 5.77 21.42%
Taiwan 10.23 7.64 33.93%
Other 51.84 60.45 -14.25%
Total 185.89 198.59 -6.39%
43 Source: Russian government, worked by IKI
 INDONESIA COAL IKI calculated total Russian coal export in the first 11
44 EXPORT months of 2020 was 185.89 Mt or decreased by 6.39%
y-o-y, which was caused by reduced export to European
China’s Situation, countries as the effect of lower power demand due to
The Increase in
pandemic coupled with increased power production
Power Price?
from renewable plants due to better weather condition,
however IKI noticed that since October 2020 Russian
coal export to Europe has started to increase as the
winter seasons has made lower power production from
renewable plants and also increased LNG prices. But,
the Russian coal export to Asian countries seemed to be
not affected by the pandemic as it was able to increase
sales by “double-digit” to major importing countries
like China, Turkey, Viet Nam and Taiwan but its export
to Korea decreased by 6.04% y-o-y or 24.95 Mt due to
Korean government policy of reducing power production
from coal plants.

The Russian Energy Ministry said the country’s total

coal production in 2020 was 401.2 Mt or decreased
8.19% than total production in 2019 with its coal sales
to domestic market decreased 8.6% y-o-y or to 165.24
Mt, but the Ministry said it coal export in 2020 increased
1.59% y-o-y to 192.80 Mt. The Ministry said the decrease
in the country’s coal production consequently made the
country’s income from coal industy to also shrink by
10.0% y-o-y due to lower coal sales as the effect of
lower coal demand due to the pandemic. The Ministry
also said the biggest coal producers in 2020 was SUEK
with total production of 101.18 Mt or a decrease of
4.7% y-o-y, followed by production from UMMC, SDS,
Vostsibugol and Mechel groups respectively at 40.06
Mt, 20.19 Mt, 12.91 Mt, and 15.95 Mt. The Ministry also
said power production from coal plants still has the major
share in the global energy mix in the future despite of the
EU’s (European Union) plan to impose carbon tax to help
reduce gas emission and by proposing power production
from renewable plants as the Ministry calculated power
production from coal plants are 1.3 times cheaper than
wind plants and 1.9 times cheaper than solar plants, and

44
 INDONESIA COAL it also claimed cost of power production from coal plants
45 EXPORT to be almost the same with LNG plants as it calculated
cost to produce power in coal plants is around US$ 67.0/
China’s Situation, Kwh – US$ 91.0/Kwh while in gas plants around US$
The Increase in
64.0/Kwh – US$ 91.0/Kwh.
Power Price?

3 Coal Demand by Countries

3.1. China Import

Chart 8 Coal import (Mt)

Source: China government, worked by IKI

IKI noticed preliminary data from the China government

showed the country’s coal import in December 2020
was 39.08 Mt which was a jump of 232.27% m-o-m and
increased by more than 13 times than import in December
2019, and IKI believes that import volume in December
2020 was the highest and has never happened in the same
month of the previous years since the China government
introduced import quota for coal. The China government
said the country’s total power production in December
2020 was 727.72 Twh or jumped 13.37% m-o-m with power
production from thermal plants accounted for 77.60%
of total power production or 564.7 Twh which increased
20.12% m-o-m, while China’s crude steel production in
the same month increased 4.1% m-o-m to 91.25 Mt as
shown on chart 9 below. The China government data also
showed its domestic coal production in December 2020
45
 INDONESIA COAL was 351.89 Mt or increased slightly 1.33% m-o-m, but
46 EXPORT the country’s manufacturing purchasing manager index
(PMI) in the same month decreased 0.40% m-o-m to
China’s Situation, 51.9% but still categorized in the expansion level.
The Increase in
Power Price? IKI hasn’t received China power consumption data in
December 2020, however based on the fact above
IKI then concluded the huge increase in coal import in
December 2020 was mostly caused by the increase in
power demand from housing/residential sectors rather
than demand in manufacturing and business sectors,
and IKI’s conclusion was based on the fact that the
decrease in China’s manufacturing PMI in December
2020, together with performance of the country’s crude
steel production which only increased slightly. IKI noticed
the huge increase in power demand was not supported
by other plants especially from hydro plants as data from
China government showed hydro plant power production
in December 2020 slumped 16.7% m-o-m to 76.4 Twh
due to low water level as the effect of winter season. IKI
also noticed that the higher power demand than supply
condition has made some major Chinese cities to be in
the “dark mode” for some days as China authority has
imposed limitation in power consumption by rationing
the power usage in the societies, forbidding them from
turning on the heating before the temperature falls to
below 3 degrees Celcius, turning off public street lights
and also requesting manufacturers to reduce production
activities by shifting its production schedule to other
months.

IKI noticed despite of the China government “statement”

of increasing domestic coal production in December
2020, it did not affect in reducing price movement as
IKI heard some news reports said that actually coal
production decline in some major provinces in China
by almost 5.0% y-o-y, and IKI thinks this news reports
may be correct than China’s government data as IKI
noticed that the China government has ordered seven
major coal producers in the country to increase thermal
coal productions for stabilizing domestic coal price. But
the severe winter season also made coal transportation
from the mines to power plants to be more challenging
46 as IKI heard some rivers which were usually used for
 INDONESIA COAL coal transportation could not be passed in December
47 EXPORT 2020 due to freezing, and the lower winter temperature
also created difficulties in transporting the coal by using
China’s Situation, trucks. The China National Railways said in November
The Increase in
2020 – December 2020, the company has transported
Power Price?
coal around 330.0 Mt or increased by almost 20.0 Mt
y-o-y for ensuring coal supply in the winter season, and
in the remaining months of the winter season the railway
company will give special attention for coal transportation
to power generation in order to fulfill the country’s power
demand.

Chart 9 China coal input Vs demand

Source: China government, worked by IKI

IKI calculated that total China coal import in 2020 was

304.50 Mt or increased by 1.31% y-o-y, and the increase
mostly caused by huge and significant import in December
2020. IKI noticed data from China government showed
that domestic coal production in 2020 was 3.83 Bt which
is an increase by 2.68% y-o-y, while the country’s total
thermal power production and total crude steel production
were 5,285.3 Twh and 1.05 Bt or increased 3.28% and
6.10% y-o-y, which IKI may conclude that the increase
in China’s coal import was caused by high demand for
coking coal rather than thermal coal, and the high demand
for coking has happened since Q2-2020 along with the
China government infrastructure project to increase
domestic steel consumption. IKI remembered that since
47 Q2-2020 the price difference between domestic coal and
 INDONESIA COAL export has started to widen, and within Q4-20 the price
48 EXPORT arbitration can reach more than US$ 30.0/t but has not
caused to loosen the coal import quota restriction.
China’s Situation,
The Increase in IKI noticed the chart 9 above showed that coal supply
Power Price? (domestic + import) in China since March 2020 has
been relatively stable at the level of 350.0 Mt, but coal
consumption especially consumption from power plants
has fluctuated and lower than consumption in 2019 except
for December 2020, which IKI concludes there should be
enough coal available for December consumption, then
why there was power crisis in China? IKI has tried to do
research regarding this matter and we found there are
some possibilities causing power shortage in December
2020 such as actual thermal coal supply from domestic
mines was not as per China’s government data, or power
shortage happened due to China’s plan for zero emission
in 2050 by reducing power production from coal plants,
or the China government’s plan to increase power prices
in the future. IKI believes the China government plan to
increase power price to be likely the major cause that had
made power shortage in China to occur every month in
2020 as the China power utilities have to pay and consume
higher prices of domestic coal due to government policy
of import restriction which also causes huge losses for
the utilities, therefore the utilities may try to negotiate for
an increase in power prices in the future. IKI’s thought
about this matter is also based on IKI’s experiences in
Indonesia that every time the power producer in Indonesia
demanding “its right” then customers will be having
“dark-mode” situation for a while.

IKI thinks China demand for imported coal will decrease

slightly in February 2020 due to long holidays for
lunar festivals which will mute power demand from
manufacturing and business sectors. However, IKI
thinka coal demand could jump after the holidays due
to news which mentioned about lower coal inventories
in some major plants in China. IKI thinks China’s plan to
increase domestic production may get challenges from
the high infection cases recently in major cities of China
which will force the government to impose restriction
in the movement of people and goods. IKI also heard
48 that China government has requested coal producers
 INDONESIA COAL and utilities in the country to maintain the base price
49 EXPORT for domestic coal in 2021 at the level of RMB 535.0/t or
US$ 82.0/t and with the upper price limit at RMB 640.0/t
China’s Situation, or around US$ 98.0/t. In order to maintain the price as
The Increase in
per its target and to avoid higher volatilities, the China
Power Price?
government has urged the utilities to secure 75% of its
total coal consumption in 2021 as soon as possible and
with 80% of the consumptions must use domestic coal.
The China government also requested the utilities for
not consuming over-priced coal as the government will
make full investigation of coal procurements with price
higher than the government’s cap. IKI concludes the
China government statement above indicates that the
country’s coal consumption will increase in 2021 while
domestic production may be relatively stable or decrease
due to the government’s target of closing all small coal
mines in Shanxi areas together with the investigation
into corruption in the coal mines development in inner
Mongolia.

Table 8 coal import by countries (Mt)

Jan - Nov Jan - Nov Growth
No Country
20 19 (y-o-y)
1 Indonesia 114.68 137.55 -16.6%
2 Australia 78.08 76.56 2.0%
3 Russia 32.57 31.78 2.5%
4 Mongolia 26.77 34.52 -22.4%
5 Philippines 5.29 9.34 -43.3%
6 Canada 4.87 3.81 28.1%
7 USA 0.82 1.12 -27.1%
8 Kazakhstan 0.25 0.15 69.8%
9 Colombia 1.22 1.69 -28.0%
10 Others 0.48 1.12 -57.5%
Total 265.04 297.64 -11.0%
Source: China government, worked by IKI

Data from China government showed that in November

2020 majority of its coal import was from Indonesia with
quantity of 4.42 Mt or jumped 56.03% than import in
October 2020, and with imports from Russia, Mongolia,
49
 INDONESIA COAL Canada, Australia and the Philippine of 3.09 Mt, 2.96 Mt,
50 EXPORT 0.65 Mt, 0.31 Mt and 0.25 Mt which fell respectively by
12.26%, 23.61%, 74.08%, 23.0% and 56.10% m-o-m. IKI
China’s Situation, also noticed that China’s import of thermal coal in the same
The Increase in
month was 8.04 Mt or increased slightly 2.68% m-o-m,
Power Price?
while import of coking coal fell 36.88% m-o-m to 3.72
Mt, and the coking were bought mostly from Mongolia,
Russia and Canada with quantity of 2.49 Mt, 0.53 Mt
and 0.31 Mt. IKI noticed China also imported coking coal
from Australia at a volume of 0.25 Mt or falling 83.86%
m-o-m which was the biggest decrease than China’s
coking coal import from other countries despite of the
news reports which mentioned some coal loaded vessels
from Australia were stranded in China’s coast waiting for
custom clearance. China’s coal import performance in
November – December 2020 has confirmed the issue on
the ban of Australian coal.

IKI calculated that the average price of the imported

thermal coal in November 20 was US$ 44.72/t or
decreased by US$ 2.57/t than price in October 2020 which
happened because of a decrease in the buying price
of Indonesian coal by US$ 3.35/t or only US$ 38.91/t,
and the decrease happened as China has increased its
import of Indonesian LRC by more than 130% m-o-m to
2.91 Mt. China also decreased its buying price of thermal
coal from Mongolia and the Philippines by US$ 0.80/t
and US$ 2.80/t to US$ 28.82/t and US$ 34.15/t, but its
average buying price of thermal coal from Australia and
Russia increased to US$ 61.23/t and US$ 55.91/t. IKI then
concludes the increase in China’s import of Indonesia
thermal coal could also be related to the country’s target
of reducing the average price of imported coal as the
effect of high price of domestic coal as Indonesia was
producing lower price thermal coal but with better grade
than other LRC exporting countries like the Philippines,
Mongolia, and or Myanmar.

50
 INDONESIA COAL IKI also noticed there were some statements which said
51 EXPORT that the power deficit happening in China in December
2020 – January 2021 was due to its ban of Australian coal,
China’s Situation, which include thermal coal, which cause a decrease in
The Increase in
thermal coal supply from export market to China especially
Power Price?
the better and high grade thermal coal. IKI noticed data
from China government “indicate” that its thermal coal
import from January – November 2020 was 196.04 Mt,
and with Australia as the second biggest thermal coal
exporter with quantity of 42.71 Mt or 21.79% of total
China’s thermal coal import, and the statement which
mentioned that China can only find high grade thermal
coal from Australia may not be correct, as shown on the
chart 10 below.

Chart 10 Thermal coal import prices (US$/t)

Source: China government, worked by IKI

IKI calculated the average price of same type thermal

coal from Australia, Indonesia and Russia were US$
63.50/t, US$ 58.10/t and US$ 59.00/t, and by including
the distances of each exporting countries, IKI may
conclude the China import of Australia thermal coal have
almost the same quality with its import from Indonesia,
and Russia, therefore China’s ban of Australia coal shall
not affect much on decreasing thermal import as the
country can still have the same quality coal from Russia
and Indonesia.

51
 INDONESIA COAL 3.2 Japan import
52 EXPORT

China’s Situation,
The Increase in
Power Price?

Chart 11 Japan coal import (Mt)

Source: Japan government, worked by IKI

Data from Japan government showed the country’s coal

import in November 2020 was 14.50 Mt or decreased
1.36% m-o-m which consisted of imports from Indonesia,
Russia and Colombia of 1.75 Mt, 1.84 Mt and 55.0 KT
or decreased respectively 15.93%, 26.0% and 51.0%
m-o-m, while imports from Australia, Canada and the US
increased to 9.02 Mt, 0.90 Mt and 0.80 Mt. IKI noticed
Japan’s government data also showed the country’s
power consumption in the same month was 66.90 Twh
which increased slightly 1,32% m-o-m, and its crude steel
production also increased 0.92% m-o-m to 7.26 Mt. IKI
then concluded that the decrease in Japan coal import
in November 2020 was caused by its lower demand for
imported thermal coal which was indicated also by the
decline in its import from Indonesia, Russia and Colombia
which primarily produces thermal coal. IKI also calculated
the average price of imported coal was US$ 80.30/t or
increased by US$ 0.90/t m-o-m, with price of Australian,
Indonesia, Russia, US and Canada coal respectively at
US$ 79.75/t, US$ 65.70/t, US$ 73.79/t, US$ 107.23/t and
US$ 95.47/t
52
 INDONESIA COAL Table 9 Import by countries (Mt)
53 EXPORT
Jan - Nov Jan - Nov Growth
No Country
20 19 (y-o-y)
China’s Situation,
1 Australia 93.76 99.54 -5.8%
The Increase in
Power Price? 2 Indonesia 25.21 24.99 0.9%
3 Russia 19.72 18.56 6.3%
4 USA 8.46 12.32 -31.3%
5 Canada 8.76 8.65 1.3%
6 Kazakhstan 0.25 0.07 275.8%
7 Colombia 0.71 1.15 -38.6%
8 Others 1.52 3.47 -56.2%
Total 158.40 168.75 -6.1%

Source: Japan government, worked by IKI

The Japan coal import in the first eleventh months of

2020 was 158.40 Mt or decreased 6.10% y-o-y with
imports from Indonesia, Russia, and Canada increased
respectively by 0.9%, 6.3% and 1.3% y-o-y, while imports
from Australia, US, and Colombia declined to 93.76 Mt,
8.46 Mt and 0.71 Mt. IKI also noticed Japan’s crude steel
production in the same period fell 17.3% y-o-y or 75.67
Mt, while its power production from coal plants in the
first 9 months of 2020 decreased slightly 3.02% y-o-y or
203.49 Twh which IKI then concluded that the decrease
in Japan’s coal import in 2020 was mostly driven by
lower demand for coking coal. IKI thinks Japan demand
for imported coal could decrease in February 2021 due
to lower power demand from manufacturing sector and
compounded with lower steel production

IKI noticed that Japan power price in December 2020

reached JPY 60.5/Kwh which was the highest price since
2018 which happened due to increase power demand for
heater as the effect of colder winter together with lower
power production from nuclear and LNG plants and
compounded by increased price of LNG. And, recently
Tepco of Japan in its formal statement has requested
for power supply from the private power plants owned
by industries such as JFE Steel, Sumitomo and Eneos
Holding to supply their excess power to overcome power
outage in Japan especially at the Tohoku and Niigata
53 prefectures. IKI noticed Japan power consumption in
 INDONESIA COAL December 2020 reached 81.58 Twh which increased by
54 EXPORT 21.78% m-o-m.

China’s Situation, Japan steel industry predicted the country’s crude steel
The Increase in production in FY 2021 – 2022 to recover to the level of
Power Price? 90.0 Mt with the assumption of higher steel demand from
domestic and export markets especially steel demand
for automobile production, but steel demand from
construction sector is expect to be stable. However,
the industry also said that their prediction will depend
on the pandemic case, China’s economic condition,
and also the trade war between China and the US. IKI
thinks the prediction of increasing steel demand will also
increase the country’s coal demand both coking coal
and thermal coal for the steel and power production, and
IKI’s prediction is also based on the request made by
the steel industry recently to the Japanese government
to provide more incentives to the industry for reducing
cost in power production due to government target of
zero-carbon policy as at this moment the Japanese steel
industry must compete with China’s steel industry which
produces 60% of the total global steel output and with
lower prices.

3.3 Hong Kong Import

Chart 12 Hong Kong coal import (Mt)

Source: Hong Kong government, worked by IKI

IKI calculated Hong Kong’s coal import in November 2020

was 0.49 Mt or increased by 59.75% m-o-m which was
54 caused by increased import from Indonesia by almost six
 INDONESIA COAL times to 0.41 Mt and import from Russia of 77.0 Kt. IKI
55 EXPORT noticed data from Hong Kong government showed the
country’s power consumption in November 2020 was
China’s Situation, 3.21 Twh or declined by 11.62% than consumption in
The Increase in
October 2020 due to decrease in power demand from
Power Price?
domestic sector by 26.93% m-o-m to only 0.81 Twh while
power consumption in the industrial sector increased
slightly 3.6% m-o-m to 0.23 Twh. IKI also calculated that
Hong Kong power companies average buying price of
Indonesian coal in November 2020 was US$ 50.58/t or
increased by only US$ 0.78/t m-o-m which came from
KPC, Berau Coal and Adaro, while the price of Russian
coal was US$ 66.58/t. IKI also calculated total Hong Kong
coal import from January – November 2020 was 5.23 Mt
or falling 43.83% y-o-y, while its power consumption
in the same period was 41.15 Twh or relatively stable
than consumption in 11 months of 2019 which IKI then
concluded that the decrease in Hong Kong’s coal import
was caused by lower power production from coal plants
which happened because of the government policy in
environment. IKI thinks Hong Kong’s coal demand in
February 2021 will decrease due to lunar festivals that
would reduce power consumption of residential and
commercial sectors.

Hong Kong government believes that the country’s

economy in 2021 will be better with strong growth
expected to happen in the second half of 2021 as the
vaccine availabilities will affect in resuming the country’s
tourism activities as many governments in the world
will ease/remove ban on travelling overseas. IKI thinks
if the assumption of Hong Kong government happens
then it will increase domestic power consumption and
also increase the government’s incomes. Hong Kong
government also said that the country’s deficit by end of
March 2021 will reach HK 0.30 trillion or the highest ever
in the Hong Kong history as the effect of the country’s
economic contraction since the past two years and the
government’s economic stimulus program to overcome
the effect of Covid-19.

55
 INDONESIA COAL 3.4 Viet Nam import
56 EXPORT

China’s Situation,
The Increase in
Power Price?

Chart 13 Viet Nam coal import (Mt)

Source: Viet Nam government, worked by IKI

IKI noticed data from Viet Nam government showed the

country’s coal import in November 2020 decreased 12.5%
m-o-m or 3.07 Mt as the effect of decreased import of
Indonesia coal by 38.28% m-o-m or 0.97 Mt while imports
from Australia, Russia and China were 1.31 Mt, 0.51 Mt,
and 23.16 Kt or increased respectively by 2.87%, 13.46%,
and 195.0% m-o-m. IKI also noticed the country’s power
production in the same month declined 6.1% m-o-m or
almost 19.0 Twh as the effect of lower activities in the
manufacturing sector as data from Viet Nam showed
its manufacturing production index in the same month
decreased by almost 2.2% m-o-m. IKI then concluded
that the decrease in Viet Nam’s coal import in November
2021 was mostly caused by lower import of thermal coal
as the effect of lower power production of coal plants,
while import of coking coal which were mostly supplied
from Australia, Russia and other countries increased due
to stable demand from the smelters industry.

56
 INDONESIA COAL Table 10 import by countries (Mt)
57 EXPORT
Jan - Nov Jan - Nov Growth
No Country
20 19 (y-o-y)
China’s Situation,
1 Indonesia 15.61 13.69 14.0%
The Increase in
Power Price? 2 Malaysia
3 Australia 18.48 12.99 42.2%
4 Russia 7.21 6.64 8.6%
5 Japan 0.30 0.12 155.0%
6 China 0.23 0.60 -60.8%
7 Others 9.04 5.55 63.0%
Total 50.88 39.59 28.5%
Source: Viet Nam government, worked by IKI

IKI also calculated that total Viet Nam coal import in the
first eleven months of 2020 was 50.88 Mt or increased
28.5% m-o-m, while the country’s power production in
the same period only increased by almost 3.0% y-o-y to
215.6 Twh, and its steel production index from January
– November 2020 increased by around 6.0% y-o-y. IKI
then concluded that the increase of the Viet Nam coal
import in 2020 was caused by higher demand for thermal
coal as the effect of lower power production from hydro
plants which then made the country increase its power
production from coal plants, and the country’s demand
for coking coal also increased as shown by the increasing
activities in the steel manufacturing industry. IKI thinks
Viet Nam’s coal demand in February 2021 will decrease
slightly due to high power production from hydro plants
and lower coal demand from steel industry.

Viet Nam Ministry of Trade and Industry was targeting to

submit the country’s Electricity Planning VIII to the Prime
Minister by end of December 2020 for approval. This
electricity plan will contain about the national energy plan
for the period 2021 – 2030. The Ministry said it forecast
that the country’s power demand in the period of 2021 –
2030 will increase by 8.3% per annum, and in 2030 the
country’s power demand will reach 490.8 Twh which will
need power supply of 550.7 Twh. Meanwhile, Viet Nam
state owned power company (EVN) said it forecasted that
the country’s power demand will increase by 8.6% per
57
 INDONESIA COAL annum under base case scenario, but in the high case
58 EXPORT scenario the country’s power demand could increase
by 9.4% per year. IKI also found other statements from
China’s Situation, EVN which predicted that the country’s power demand in
The Increase in
2021 will increase to 235.2 Twh in the base case scenario
Power Price?
and in high case scenario demand will reach up to 236.97
Twh, and accordingly will need power production up to
267.9 Twh in base scenario and or 269.9 Twh in high
case scenario. However, the Viet Nam government also
predicted the country’s power deficit in 2021 could reach
around 3.7 Twh as the effect of delay in the completion of
some power plant projects which will make the country to
increase its power purchase from neighboring countries
like Laos.

IKI thinks the government’s prediction of an increase

in power demand in 2021 by 8.6% - 9.4% will affect in
increasing the country’s demand for imported coal as the
country will boost power production from coal plants due
to delay in hydro and gas plants construction projects,
and IKI also heard that Vinacomin, the Vietnam national
coal company, is targeting to reduce its coal import in
2021 to only 1.4 Mt due to the company’s plan to develop
its owns mines by increasing production capacity,
increasing coal quality, and increase exploration in coal
and mineral sectors. The Vinacomin’s statement above
will make more volume of imported coal available for the
market to trade.

58
 INDONESIA COAL 3.5 Thailand import
59 EXPORT

China’s Situation,
The Increase in
Power Price?

Chart 14 Thailand coal import (Mt)

Source: Thailand government worked by IKI

IKI calculated Thailand coal import in November 2020 fell

34.17% m-o-m or 1.50 Mt which consisted of imports
from Indonesia, Australia, Russia and Laos of 1.26 Mt,
61.13 Kt, 0.15 Mt, and 12.97 Kt or falling 23.51%, 85.60%,
19.96% and 2.2% m-o-m. Meanwhile, data from Thailand
government showed the country’s power production
in the same month decreased 0.79% m-o-m to 16.30
Twh because of lower power demand from residential,
industrial and business sectors, but the country’s power
production from coal plants increased 4.65% m-o-m to
1.55 Twh due to decrease power supply from imported
country. IKI also calculated Thailand buying price of
imported coal in November 2020 declined by US$ 1.75/t
m-o-m or to US$ 52.93/t with its buying price of coal from
Indonesia, Australia, Russia and Laos respectively at US$
51.37/t, US$ 49.00/t, US$ 61.12/t and US$ 29.00/t.

59
 INDONESIA COAL Table 11 Import by countries (Mt)
60 EXPORT
Jan - Nov Jan - Nov Growth
No Country
20 19 (y-o-y)
China’s Situation,
The Increase in 1 Australia 3.54 3.96 -10.56%
Power Price? 2 Indonesia 16.51 14.94 10.52%
3 Russia 1.42 0.95 50.01%
4 Laos 0.14 0.35 -59.75%
5 Viet Nam 0.11 0.09 13.71%
6 Colombia 0.17 0.17 0%
7 Other 0.24 0.51 -52.52%
Total 22.13 20.95 5.61%
Source: Thailand government worked by IKI

IKI also calculated total Thailand coal import in the first

eleven months of 2020 was 22.13 Mt or increased 5.61%
y-o-y with the biggest increase were imports from Russia
and Indonesia respectively by 50.01% and 10.52% y-o-y.
IKI noticed that the country’s total power production
from coal plants in the same period was almost 16.70
Twh which increased by 2.0% y-o-y, and the country’s
steel production in January – November 2020 decreased
12.4% y-o-y or 2.05 Mt which IKI then concluded that
the increase in Thailand’s coal import was caused by
its high demand for thermal coal as the effect of low
power production from hydro plants and also because
of the increase in price of natural gas. IKI thinks Thailand
demand for imported coal in the first quarter of 2021 may
still under pressure due to higher power production from
hydro plants, however, IKI also noticed that LNG price in
seaborne market has jumped to almost US$ 20.0/MMBTU
or almost triple than Thailand’s price in domestic market
which will force the country to increase power production
from coal plants.

Thailand state owned power company (EGAT) said the

country’s power demand in 2020 decreased by 3.0% y-o-y
as the effect of covid-19 and it predicted the country’s
power demand in 2021 will better and increase by 4.0%
y-o-y. EGAT also said that it has prepared budget of around
THB 40.0 billion which will be used for the construction
60 of new power plants and for making new transmission
 INDONESIA COAL lines. EGAT expressed its concern about the Thailand
61 EXPORT government’s statement in stopping the construction of
new coal plants in the future as EGAT believes coal plants
China’s Situation, are still needed by the country especially for reducing
The Increase in
the electricity cost and also to maintain the fuel ratio
Power Price?
distribution together with the diversification of power
plants by fuels type. EGAT also said the current national
energy system doesn’t have clear guidance about the
country’s plan of increasing power production from
renewable plants due to the absent in the power battery
system which will make higher inefficiencies in power
production, and if the country relies on gas plants 100%
will be not be good for country’s economy also as it will
make the electricity price increase significantly, and also
will make the country’s power demand depend on gas
supply from other countries which is also not good for
the country, therefore EGAT will continue construction of
new coal fired power plants in Southern part of Thailand
as it noticed that some countries like China and Japan
also still built new coal plants.

3.6 Korea Import

Chart 15 Korea coal import (Mt)

Source: Korea government, worked by IKI

The Korean coal import in December 2020 was 11.12 Mt or

increased 9.90% than November 2020, with imports from
Australia, Canada and Colombia increased respectively
61 27.48%, 53.13% and 238.02% m-o-m to 5.41 Mt, 1.13
 INDONESIA COAL Mt, and 0.48 Mt, while imports from Indonesia and
62 EXPORT Russia decreased 25.66% and 9.40% m-o-m or 1.61
Mt and 2.01 Mt. The increase in Korean coal import in
China’s Situation, December 2020 was caused by the increase in power
The Increase in
production from coal plants due to winter season as IKI
Power Price?
noticed the country’s average power supply in December
20 increased 12.90% m-o-m to 7.58 GW, and IKI also
thinks that the increase in the December coal import was
also caused by increased demand for coking coal as IKI
noticed the country’s automobile production increased
by 9.38% m-o-m to 0.35 million units.

Table 12 Import by countries (Mt)

Growth
No Country 2020 2019
(y-o-y)
1 Australia 47.45 51.76 -8.3%
2 Indonesia 25.04 31.08 -19.5%
3 Russia 26.51 29.12 -9.0%
4 Canada 11.84 12.53 -5.5%
5 South Africa 1.54 4.05 -62.0%
6 Colombia 4.90 5.26 -6.8%
7 USA 3.74 3.63 3.0%
8 China 1.30 1.90 -31.6%
9 Others 1.32 2.07 -36.0%
Total 123.63 141.40 -12.6%
Source: Korea government, worked by IKI

IKI calculated total Korean coal import in 2020 was 123.63

Mt or decreased 12.60% y-o-y, and with the biggest
decrease seen in demand for Indonesian coal which fell
19.5% y-o-y, while demand for Australia, Russia, and
Canada coal only decreased 8.3%, 9.0% and 5.5%.
IKI noticed Korea’s power production from coal plants
in January – November 2020 decreased 13.76% y-o-y
or 183.97 Twh, and crude steel production in the same
period also decreased by 7.2% y-o-y or 60.80 Mt. IKI then
concluded the decrease in the Korean coal import was
mostly caused by lower demand for thermal coal due to
the Korean government policy of reducing the country’s
62
 INDONESIA COAL gas emission by closing some coal plants and reducing
63 EXPORT power production from the remaining coal plants, and
IKI’s conclusion was based on the fact that total Korea
China’s Situation, power production in January – November 2020 only
The Increase in
decreased 2.39% y-o-y or 500.50 Twh, while its power
Power Price?
production from nuclear and hydro plants has risen 7.62%
and 15.76% y-o-y, while its power production from LNG
plants only increased slightly 0.86% y-o-y to 128.98 Twh.

IKI predicted its demand for coal import will be decrease

further in February 2021 due to higher power output
from nuclear plant and also lower power demand from
manufacturing sector. However, IKI noticed that power
prices from LNG plants have increased to an average
of US$ 99.0/Kwh, higher by around US$ 22.0/Kwh than
power prices from coal plants as the effect of higher
power demand due to colder winter, and the power price
from hydro plants also increased to US$ 86.44/Kwh or
US$ 9.44/Kwh higher than coal plants prices. And due
to this matter IKI thinks there’s possibility that Korea
will increase its coal plants power production to reduce
overall prices.

IKI noticed the Korean government’s ambitious plan

under its 9th basic plan for electricity supply and demand
for the years of 2020-2034 has received comments from
the US Energy Information Administration (EIA) which
think that the Korean plan in increasing the share of its
renewable power production in the energy mix from the
current 6.0% to 42.0% in 2034 may end up with the
increase in power price in the future. At this moment the
cost to produce power from wind and solar plants are
US$ 52.2/Kwh and US$ 99.0/Kwh, but these renewable
plants, especially the solar plants, are not enough to
replace power production from coal plants due to its lower
stability in power production, high power generation cost,
and many more. The EIA also suggested that in order to
reach the country’s target of zero emission then Korea
government should change its nuclear phase-out policy

63
 INDONESIA COAL and increase its power production from nuclear plants
64 EXPORT due to its stable power generation and also lower cost.
IKI concluded that EIA’s statement to be likely the same
China’s Situation, with IKI’s opinion in IKI’s last month reports as IKI believes
The Increase in
the Korean 9th electricity basic plan was issued not only
Power Price?
because of environmental policy but also based on the
EU plan in imposing carbon taxes on imported products
to EU, please go to IKI previous report for details.

3.7 Philippine import

Chart 16 Philippine coal import (Mt)

Source: Philippine government worked by IKI

Temporary data from Philippine government showed

the country’s coal import in November 2020 decreased
3.22% m-o-m or 3.51 Mt which consisted of coal from
Indonesia of 2.25 Mt, and coal from Australia and Russia
respectively 71.5 Kt and 27.5 Kt. IKI noticed the Philippine
power consumption in November 2020 decreased 2.53%
m-o-m or 6.26 Twh due to colder weather condition which
had reduced power demand for temperature cooler and
the typhoon situation which hit the country in November
also reduced power demand from residential sector, and
the lower power demand has made the country’s power
price to decrease 10.89% m-o-m or Php 1,842/Kwh. The
heavy rain in November 2020 increased power production
from hydro plants by 39.9% m-o-m to almost 0.60 Twh
64
 INDONESIA COAL which then made power production from coal plants to
65 EXPORT decline by 7.5% m-o-m or 3.50 Twh. IKI also noticed total
Philippine coal import in January – November 2020 was
China’s Situation, 24.29 Mt or decreased 9.81% y-o-y because of decrease
The Increase in
in the country’s power demand especially demand from
Power Price?
manufacturing and business sectors due to Covid-19. IKI
thinks demand for imported coal in February 2021 will
decrease further due to decreasing power demand and
also increasing power production from hydro plants.

IKI noticed despite of the Philippine government plan

on the clean energy transition in 2040 by imposing
moratorium in the construction of new coal plant projects
since end of October 2020, the list of the Philippine
Department of Energy (DOE) power projects, which
was issued recently, still showed 11.29 GW of new coal
plant projects expected to be constructed in the short –
medium terms, with 3.54 GW expected to be completed
in 2024 – 2025 while the remaining 7.75 GW projects will
start construction in 2024 or based on the government
consideration of the country’s power supply and demand
situation. The Philippine government also said it expected
9.55 GW of new coal plants projects will be completed
within the next 20 years in order to fulfill the country’s
power demand, and it also predicted that total investment
needed for this projects will be around Php 4.40 trillion
with Php 3.18 trillion will be used for the power plants
construction while Php 0.85 billion and Php 0.36 billion
will be needed for building power transmission facilities
and also transmission lines.

65
 INDONESIA COAL 3.8 Taiwan import
66 EXPORT

China’s Situation,
The Increase in
Power Price?

Chart 17 Taiwan coal import (Mt)

Source: Taiwan government worked by IKI

IKI calculated that in November 2020 Taiwan imported

coal of 5.33 Mt or jumped 13.54% m-o-m which
consisted of imports from Indonesia, Russia and Canada
of 1.77 Mt, 1.03 Mt and 0.15 Mt or jumped respectively
39.40%, 22.10% and 85.30% m-o-m while imports from
Australia decreased 5.5% m-o-m or 2.26 Mt. IKI noticed
that Taiwan power plants production in November 2020
decrease 4.77% m-o-m or 22.44 due to lower power
demand which made coal-fired power production in the
same month fell 8.40% m-o-m or only 9.15 Twh, and IKI
also noticed Taiwan crude steel production decreased
5.3% or only 1.57 Mt. IKI then concluded the huge
increase in Taiwan’s coal import may be caused by power
plants’ stockpiling activities especially for thermal coal
in anticipation of rising power demand for heater due to
cooler winter temperature and also high price of natural
gas.

IKI also calculated total Taiwan coal import in the first 11

months of 2020 was 59.33 Mt or decreased 5.87% y-o-y,
66 while the country’s power production from coal plants
 INDONESIA COAL decreased 1.04% y-o-y or 116.64 Twh and its crude
67 EXPORT production in the same period also decreased 7.5%
y-o-y or 18.75 Mt. IKI also noticed total Taiwan power
China’s Situation, production in January – November 2020 was 257.35 Twh
The Increase in
which was an increase of 1.98% y-o-y while its power
Power Price?
production from gas plants jumped 9.34% y-o-y to 90.88
Twh, buts its nuclear plant production slightly declined
0.02% or 29.35 Twh. IKI then concluded the decrease in
Taiwan’s coal import in the first 11 months of 2020 was
mostly caused by lower demand for coking coal which
the made its import from Australia decreased 8.9% y-o-y
or 29.15 Mt but import from Canada increased slightly
3.6% to 2.1 Mt, and the decrease in coal import was also
caused by lower demand for thermal coal which made
its total import from Indonesia and South Africa in the
11 months of 2020 fell 11.2% and 76.8% y-o-y, but its
buying of Russian coal jumped 28.0% y-o-y to 9.97 Mt.

IKI thinks Taiwan demand for imported coal will decrease

in February 2021 as majority of factories and business
offices will be closed due to lunar festivals but the colder
winter from January 2021 could affect in increasing the
country’s demand for power production from coal plants
due to high LNG prices and lower output from renewable
plants especially production from hydro plants, as IKI
noticed in November 2020, which was the first month of
winter, its renewable power production fell 19.6% m-o-m
or only 1.40 Twh.

67
 DOMESTIC 1. ESDM DMO
68 DEMAND

DMO Realization in
2020

Chart 18 DMO realizations (Mt)

Source: ESDM, worked by IKI

IKI noticed ESDM temporary data showed domestic coal

consumption (DMO) in November and December 2020
were 12.54 Mt and 9.75 Mt, respectively, which then made
total DMO in 2020 at 130.75 Mt or a decrease of 5.25%
than DMO in 2019. ESDM in its formal statement said
total DMO realization in 2020 was 132.0 Mt, which is a
decrease of 4.35% y-o-y or only 85% of the government’s
target of 155 Mt, and ESDM explained the decrease in
DMO realization happened because of reduced domestic
electricity consumption due to lower industrial activities
as the effect of Covid-19 pandemic. IKI has tried to
compile DMO realization in 2020 as shown on the table
13 below

68
 DOMESTIC Table 13 ESDM DMO (Mt)
69 DEMAND
2020 2020
No Industry 2019 2021 (F)
(Target) (realization)
DMO Realization in
General
2020 1 98.55 109 105.0 113
Power
2 Metallurgy 10.06 16.52 13.0 6
3 Cement 3.33 14.54 6.0 6
4 Paper 1.07 6.64 2.0 12.5
5 Fertilizer 0.91 1.73 0.7 0
6 Textile 0.38 6.54 0.3 0
7 Other 24.12 0 5.0 0
8 Total 138.42 155.0 132 137.5
Total 123.63 141.40 141.40 -12.6%
Source: ESDM, compiled by IKI

ESDM also said it’s targeting DMO in 2021 at 137.5 Mt

or an increase of 4.17% y-o-y as it expected economic
activities will recover which will increase coal demand for
general power to 113.0 Mt, while coal demand from paper
industry will increase up to 12.50 Mt and demand from
cement industry will be stable at 6.0 Mt, but coal demand
from smelters will fall to only 6.0 Mt, which IKI found as
very interesting, please subscribe IKI’s nickel report on
same edition to know the stories behind ESDM statement
on increase significantly DMO on some industries. ESDM
also said it has revoked sanction for miners which have
not fulfilled their DMO quota in 2020 due to lower than
target coal consumption in the domestic market as the
effect of Covid-19 which has been listed in the Minister
of ESDM decree no, 255.K/30/MEM/2020 clause 7, but
in this decree ESDM still maintains its price cap for DMO
at the level of US$ 70/t and also maintains the financial
sanction for miners which fail to full the DMO quota in
2021.

APBI appreciated the Minister ESDM decree revoking

the financial sanction for miners failing to fulfill their
respective 2020 DMO quotas, saying this will be very
helpful to the miners financial condition which has been
in difficult situation due to the pandemic, and APBI hoped
69 ESDM will also revoke the financial sanction in 2021 as
 DOMESTIC many miners will be unable to supply coal with quality of
70 DEMAND 4,000 – 5,000 GAR required by end users in the domestic
market. ABM Investama said the government’s policy of
DMO Realization in revoking the financial sanction is a wise decision from the
2020
government as 2020 was an abnormal and very difficult
situation for miners as export demand plummeted and
price fell significantly while domestic market was unable
to consume more coal due to low capacity. In responding
to the APBI request to also remove DMO penalties in
2021, ESDM only said that the government will study this
request as this matter is related to public demand for low
power price.

2. Power consumption

Chart 19. Power consumption (Twh)

Source ESDM, Indonesia government, analyze by IKI

Minister of Finance, Sri Mulyani said that in November

2020, Indonesia’s economy continued the recovery
process with improvement in a number of economic
indicators such as increasing power consumption, milder
inflation, and better public index mobility. Sri Mulyani also
explained that electricity consumption in November 2020
contracted 2.2% y-o-y, lower than the contraction in
October 2020 of 2.3% y-o-y. Sri Mulyani added that the
country’s purchasing manager index (PMI) in November
2020 was 50.6% which showed an expansion and also
indicated recoveries in the manufacturing and industrial

70
 DOMESTIC sectors. She predicted that the Indonesian economy will
71 DEMAND be better in 2021 as some financial institutions like ADB,
the Wold Bank and OECD have forecasted Indonesian
DMO Realization in economic growth in 2021 respectively of 4.5%, 4.4% and
2020
4.0%, compared to Indonesian government projection of
5.0%.

IKI calculated Indonesian power consumption in

November 2020 was almost 20.8 Twh or decreased
slightly 2.47% m-o-m which consisted of consumption
in the residential, business and industrial sectors of 9.55
Twh, 3.30 Twh, and 6.39 Twh or decreased respectively
by 2.31%, 8.64% and 0.28% m-o-m. Meanwhile, power
consumption in the government and other sectors
increased to 0.70 Twh and 0.84 Twh. The huge decrease
in power consumption in the business sector happened
mostly because of the increase in Covid-19 infected
cases which forced some companies to re-apply work
from home policies. IKI noticed the power consumption
data used by the Minister of Finance in supporting her
comment about improvement in the country’s economy
may not be appropriate and did not reflect the actual
situation as IKI thinks that Sri Mulyani’s ideas of comparing
the power contraction in November 2020/November
2019 with the contraction in October 2020/October 2019
to be not correct as in October 2020 there were lots of
public holidays compared to October 2019 which then
made the contraction to be higher than the same period
in November 2020.

PLN said coal consumption in the general power sector

in November 2020 was 9.15 Mt or decreased by 3.68%
m-o-m which consisted of PLN and IPP consumption
respectively 5.61 Mt and 3.54 Mt, and with 2.34 Mt of the
total coal consumption was provided by PLN Batubara
(PLN subsidiary in coal trading). The data from Indonesia
government showed that power production from coal-
fired plants in November 2020 was 15.95 Twh or decreased
by 0.79% m-o-m and production from hydro plants also
decreased by 3.3% m-o-m or 1.56 Twh.

71
 DOMESTIC Table 14 Power consumption by customers (Twh)
72 DEMAND
Jan - Nov Jan - Nov Growth
No Customer
20 2019 (y-o-y)
DMO Realization in
1 Resident 103.15 93.83 9.93%
2020
2 Business 37.01 40.47 -8.55%
3 Industries 65.25 70.61 -7.59%
4 Government 7.53 7.60 -0.87%
5 Others 8.94 9.26 -3.47%
Total 221.88 221.76 0.05%
Source ESDM, Indonesia government,
analyzed by IKI

PLN said total power consumption until November 2020

was 221.87 Twh or increased by only 0.95% y-o-y due
to lower demand from business and industrial sectors as
the effect of the pandemic, and it predicted that looking
at the power consumption figure until the 11th month
of 2020, total power consumption for the whole year
will decrease by 0.2% y-o-y, or better than PLN’s initial
projection of a contraction by 6.0% y-o-y made in mid-
2020 due to the outbreak of coronavirus. PLN said total
coal consumption in the general power sector in the first
11 months of 2020 was 96.99 Mt or increased by 8.10%
y-o-y.

PLN explain that power consumption in Java, Madura and

Bali region in January – November 2020 decreased by 2.0%
y-o-y, while consumption in Sumatra – Kalimantan region
increased by more than 4.0%, and power consumption in
Sulawesi-Maluku-Papua region increased by 7.0% y-o-y.
PLN also said it will try to increase power sales especially
in Java – Bali region to avoid further power contraction
in 2020, and to encourage businesses to consume more
power, while PLN will provide tariff discounts for business
and industrial sectors.

IKI calculated total power consumption in the first eleven

months of 2020 was 221.88 Twh or an increase of only
0.05% y-o-y, with the increase in consumption only
occurring in the residential sector by 9.93% y-o-y to
72 103.15 Twh because of work from home policies imposed
 DOMESTIC by industrial and business sectors to help reduce the
73 DEMAND spread of Covid-19. Meanwhile, power consumption in
the government sector was relatively stable at 7.53 Twh.
DMO Realization in IKI also calculated total coal consumption in the general
2020
power sector in January – November 2020 reached 97.98
Mt, making power production from coal-fired plants in
January – November 2020 to jump by 38.89% y-o-y to
165.24 Twh. With the coal consumption figure in the first
11 months of 2020, IKI is optimistic that full-year coal
consumption in the power will be more than 105.0 Mt,
which has been predicted by IKI in its previous report.

3. Cement consumption

Chart 20 Cement consumption (Mt)

Source: Government institution, analyze by IKI

Indonesia cement association (ASI) said cement

consumption in the domestic market in November-2020
fell by 13.9% than consumption in November 2019, which
then made overall cement consumption in the domestic
market in the first 11 months of 2020 to decrease by 10.2%
y-o-y, and blaming the decrease to the coronavirus effect.
ASI also said cement export in the November-2020 was
almost 0.68 Mt or slightly declined by 0.29% y-o-y due to
the start of the rainy season that has caused delay in the
cement shipments, but it predicted that overall cement
export in January – November 2020 to jump by 40%
y-o-y to 8.6 Mt, with shipments to China, Bangladesh,
and Australia increased respectively by 40%, 30% and
73 12% y-o-y. ASI also predicted total cement consumption
 DOMESTIC in domestic market in 2020 to reach 62.2 Mt or a decrease
74 DEMAND by 10.5% than 2019, which will be the biggest decrease
in the past 10 years. But cement export in 2020 will jump
DMO Realization in by 43.75% y-o-y to 9.2 Mt which will then make overall
2020
cement production in 2020 to decrease by only 6.0%
y-o-y or 71.8 Mt. ASI claimed that the lower cement
consumption in the domestic market in 2020 was caused
by the government policy of cutting its infrastructure
budget by 36% y-o-y to only IDR 80.0 trillion due to the
coronavirus effect, and ASI also said the decrease in
cement demand in the domestic market was also caused
by reduced demand from real estate sector by 10% y-o-y
as many developers halted their projects pending better
economic situation.

IKI calculated cement consumption in November 2020

was 6.93 Mt or decreased 2.38% m-o-m, which consisted
of cement consumption in domestic and export market
respectively at 6.21 Mt and 0.72 Mt. IKI also calculated
that overall cement consumption in January – November
2020 was 65.54 Mt or a decrease by 4.47% y-o-y and
consisted of consumption in domestic market of 56.99 Mt
or decreased 9.93% y-o-y while cement export jumped
60.30% y-o-y to 8.55 Mt. IKI believes the decrease in
domestic cement consumption was mostly caused by
lower cement demand in the Q2-20 and Q3-20 as the
effect of Covid-19 outbreak, which had prompted the
government to reallocate some of its infrastructure budget
to the health sector to help deal with the pandemic,
and also to provide stimulus incentives to the people
to maintain stability in the retail sector. The decrease in
domestic cement consumption was also caused by lower
cement demand in the housing sector as people cut down
expenses due to the economic uncertainty. However, IKI
noticed the domestic cement consumption in November
2020 was relatively stable than consumption in October
2020 which IKI thinks happened because of the increased
activities in the construction and housing sectors as the
government restarted infrastructure projects along with
consumers’ expectation of better economic condition in
the future, as IKI noticed that the latest survey conducted
by a government institution said that the consumers
74 expectation index on economic condition in November
 DOMESTIC 2020 increased to 123.9% or the same level with the
75 DEMAND index prior to the pandemic.

DMO Realization in
2020 Market News

• The government has included PTBA gasification

project in the list of national strategic projects (PSN)
since 2020 as stipulated in Presidential Regulation
No 109/2020. PTBA gasification project is one of
the pioneer projects in the coal downstream industry
to produce dimethyl ether from domestic coal that
will help reduce LPG import in the future. There are
some advantages and incentives to be received by
PTBA after the project is included in the PSN such as
easiness in licensing, zero coal royalty, zero import tax
and many more.
• State-owned electricity firm PT PLN has sent letter to
six coal mines in Indonesia to get coal supply more of
than 1.0 Mt for January – February 2021 deliveries in
accordance with the government DMO policy. One of
the mining companies which received the PLN letter
has expressed its concern regarding the shipment
schedule requested by PLN, as the company prefers
to supply to export market due to favorable price.
• PT Pertamina has signed an agreement with PT Berkah
Bomba Energi to develop coal gasification project that
will produce dimethyl ether to support government
program to develop coal downstream industry, and
help decrease the country’s current account deficit by
reducing LPG import. There are no further information
regarding the project but IKI thinks this project will be
located in South Sumatra.
• PT Dian Swastatika Sentosa (DSSA) said the company
has sold 75% shares in subsidiary PT DSSP Power Mas
Utama (PMU) to Datang Overseas Energy Investment
Co Ltd with the value of US$ 394.0 million, and DSSA
said this transaction was part of the company’s plans
to diversify its business to renewable power plants in
the future. DSSA also said the transaction will make
Datang Group become the major shareholder in three
75
 DOMESTIC of PMU’s coal fired power plants with total capacity of
76 DEMAND 600 MW.
• PT Indocement Tunggal Prakarsa said its cement
DMO Realization in
2020 sales in the first eleventh months of 2020 was 15.0 Mt
or decreased 8.53% y-o-y due to the pandemic and
unfavorable weather condition which has halted some
of the major construction projects run by its customers.
The company expected overall cement sales in 2020
to reach 16.0 Mt or a decline by more than 2.0 Mt than
sales in 2019, but it also expected the company’s sales
will increase in 2021 due to increasing consumption
from the housing sector.

76
 INFRASTRUCTURE
77 Major Port Performance
Floods in South
Kalimantan
Table 15 Export by major ports (Mt)
No Ports Oct-20 Sep-20 m-o-m Oct-19 y-o-y
1 Samarinda 6.42 5.76 11.4% 8.63 -25.6%
2 Banjarmasin 4.77 4.47 6.7% 7.28 -34.5%
3 Tanjung Bara 5.03 3.99 25.9% 4.59 9.5%
4 Satui 3.07 2.63 16.5% 4.91 -37.6%
5 Muara Pantai 1.48 1.57 -5.9% 3.63 -59.4%
6 Adang Bay 1.78 1.28 38.7% 2.27 -21.8%
7 Balikpapan 1.95 2.17 -10.3% 0.93 109.3%
8 Palembang 1.15 0.91 26.1% 1.62 -29.0%
9 Tarakan 1.17 1.30 -10.1% 1.49 -21.3%
10 Bontang 1.04 0.56 85.8% 1.03 1.2%
11 Sangkulirang 1.55 1.32 17.8% 1.01 54.4%
12 Kotabaru 0.54 0.18 201.9% 0.54 -0.4%
13 Tarahan 0.62 0.37 70.4% 0.69 -9.0%

Source: Government institution, worked by IKI

IKI noticed majority of coal ports in Indonesia saw

increased export volume in November 2020 due to higher
coal demand from China, with the biggest increase seen
in export from Tarahan port by 89.7% m-o-m to 1.18 Mt,
which consisted of high grade and medium grade coal
respectively 0.36 Mt and 0.82 Mt or increased 25.62%
and 144.81% m-o-m. However, the average price of
PTBA’s export was only US$ 44.54/t or down by US$
1.15/t than price in October 2020 which happened due
to significant increase in its medium grade shipment. The
coal export from Muara Pantai port jumped by 63.3%
m-o-m to 2.41 Mt, which consisted of export of high grade
coal produced by Berau Coal at 0.14 Mt or increased by
50.4% m-o-m, and increase in export of medium grade
coal by 31.60% m-o-m to 1.82 Mt which consisted
shipment from Berau Coal and SBE respectively 1.77 Mt
and 54.73 Kt. IKI noticed that LRC export from Muara
Pantai port increased to 0.45 Mt majority produced by
KJB, ATM, BBA, and NBC at 0.14 Mt, 0.12 Mt, 54.66 Kt,
77 and 44.45 Kt.
 INFRASTRUCTURE Coal export from Balikpapan port jumped 40.4% m-o-m
78 to 2.74 Mt, which consisted of exports of bituminous
Floods in South and sub bituminous coal produced by Bayan group at
Kalimantan 0.52 Mt and 2.08 Mt or increased 23.04% and 36.29%
m-o-m and LRC sales of 0.14 Mt. However, despite of
the huge export increase and increase in global coal
price, IKI calculated the average price of Bayan’s coal
export in November 2020 only increased by US$ 0.41/t
to US$ 39.77/t which IKI thinks happened due to increase
shares of Bayan sales of medium grade coal and LRC.
IKI noticed export from Satui port increased by 39.6%
than export in October 2020 to 4.28 Mt, and the increase
was caused by higher shipment of medium grade coal by
almost five times to 0.35 Mt which consisted of exports
made by Arutmin, Mitra Setia, Sinar Deli and BIB of 0.15
Mt, 50.10 Kt, 73.4 Kt and 78.0 Kt, followed by increased
of LRC export by 32.31% to 3.77 Mt which consisted of
exports made by BIB, SDJ, TBR, TIA, Tri Tunggal, and
PCN at 2.22 Mt, 0.42 Mt, 0.53 Mt,0.29 Mt, 0.25 Mt, and
49.97 Kt. IKI noticed that export of high grade coal from
Satui port increased by 11.34% m-o-m to 0.15 Mt which
were produced from Wahana’s mine with the average
price of US$ 83.20/t.

IKI noticed coal export from Banjarmasin port increased

14.3% m-o-m to 5.45 Mt, and the increase was mostly
caused by higher LRC export of 125.23% m-o-m to 1.35
Mt which consisted of export from BMB, AGM, BRE, Restu
Ibu, and AJS respectively 0.65 Mt, 0.38 Mt, 0.16 Mt, 88.7
Kt and 74.0 Kt, and increase in export of medium grade
coal by 3.19% m-o-m to 2.91 Mt consisting of sales from
Adaro and RLK respectively 2.80 Mt and 56.15 Kt, while
export of high grade coal via this port fell 11.94% m-o-m
or 1.18 Mt which consisted of exports from Adaro, ABB,
PMM, MGM, SMM, MUTU, and Maruwai respectively
0.35 Mt, 0.24 Mt, 0.20 Mt, 0.15 Mt, 0.13 Mt, 55.73 Kt, and
53.10 Kt. The coal export from Tarakan port increased
14.8% m-o-m to 1.35 Mt which was caused by increase
in shipment of medium grade coal by 33.28% m-o-m to
1.26 Mt which were mostly produced by MIP, Baramulti
and PMJ mines, and LRC shipment of 34.32 Kt produced
by PKN. But IKI also noticed that sales of high grade coal
78 via Tarakan port plummeted 78.60% or 48.0 Kt which
 INFRASTRUCTURE consisted of Baramulti shipment to the Philippines and
79 Viet Nam of 15.0 Kt and 33.0 Kt with price respectively at
Floods in South US$ 48.59/t and US$ 47.25/t.
Kalimantan
IKI noticed export from Adang Bay port increased
slightly by 8.5% m-o-m to 1.93 Mt, which was caused
by increased LRC export of 28.1% m-o-m to 1.19 Mt
which were produced by Kideco mine, but Kideco’s
export of medium grade and high grade coal decreased
18.21% and 0.61% m-o-m to 0.49 Mt and 0.24 Mt. IKI
also calculated the average export price of Kideco coal in
November 2020 was US$ 34.12/t or increased only US$
0.50/t than price in October 2020 due to increased LRC
sales.

However, on the other side IKI noticed that export from

Sangkulirang port in November 2020 fell 14.3% m-o-m or
1.33 Mt mostly caused by decrease in LRC shipment from
LG mines to only 0.78 Mt due to lower demand for very
low grade coal from China and India, while LRC shipment
from Indexim mine was relatively stable at 0.55 Mt. IKI
also calculated the average export price of coal from LG
and Indexim mines were US$ 18.90/t and US$ 29.10/t
or increased by US$ 1.5/t and US$ 2.3/t than price in
October 2020. Coal export from Kotabaru port decreased
by 8.5% m-o-m to 0.49 Mt caused by decrease in sales of
high grade and medium grade coal which were produced
from STC mine by 37.15% m-o-m to 0.11 Mt, while export
of LRC from Jhonline mines increased 6.01% m-o-m to
0.37 Mt with average price of US$ 19.54/t or increased by
US$ 1.47/t than October price, as Jhonline was able to
get better price from its Viet Nam’s customers. IKI noticed
export from Palembang port decreased 5.2% m-o-m or
1.09 Mt which was caused by lower export of high grade
coal and LRC by 33.6% and 90.39% m-o-m to 39.13 Kt
and 5.24 Kt which were produced from RUBS and BMP
mines, while export of medium grade coal was relatively
stable at the level of 1.04 Mt which were produced mostly
from PTBA, Titan Infra, Dizamatra, and CES mines.

Coal export from Bontang port decreased by 3.7% m-o-m

or 1.0 Mt which consisted of exports of high grade and
79 medium grade coal produced from ITMG mines of 0.68 Mt
 INFRASTRUCTURE and 0.32 Mt or decreased by 4.57% and 1.91% m-o-m.
80 IKI noticed that the decrease of ITMG export was mostly
Floods in South caused by lower sales to India, Taiwan and Thailand, and
Kalimantan no shipment to Malaysia and Philippine. But its exports
to Bangladesh, China and Japan increased to 0.27 Mt,
0.30 Mt and 0.27 Mt. IKI calculated that ITMG’s export
price in November 2020 increased by US$ 1.44/t to
US$ 49.0/t mostly caused by increase in its selling price
to Asian market. IKI noticed export from Tanjung Bara
port decreased slightly 2.2% m-o-m to 4.92 Mt which
consisted of KPC export of high grade and medium grade
coal at 1.05 Mt and 3.87 Mt. IKI noticed the decrease
in KPC export was mostly caused by decrease in sales
to India, Korea and Taiwan by 27.51%, 60.51% and
16.91% m-o-m or 1.65 Mt, 0.16 Mt and 0.34 Mt, while
KPC’s export to China, Japan and Philippine increased
by 36.5%, 108.0% and 130.50% m-o-m to 1.50 Mt, 0.51
Mt and 0.25 Mt. IKI calculated that the average price of
KPC’s export sales in November 2020 was US$ 44.24/t
or increased by US$ 4.48/t which was caused mostly by
the company’s ability to increase export of high grade
coal to Japan and the Philippines which offered better
price than its customers in India and Taiwan.

IKI concluded that the high coal demand in November

2020 has given miners greater flexibility to increase their
LRC export volume as happened with Bayan, Kideco,
Jhonline, BIB, AGM, and other LRC producers which IKI
thins was mostly caused by the increase in coal price.
However, on the other side some miners such as ITMG
and KPC suffered lower export which IKI thinks happened
because of their higher prices. In order to increase sales
these miners will have to produce coal with lower grade
in order to compete in price with other producers in
Indonesia.

Floods in South Kalimantan

The provincial government of South Kalimantan has put

the province under the disaster emergency response
status since 14th January 2021 due to the massive
floods affecting almost all regions in the province with
80 only three regions reportedly safe from the floods. The
 INFRASTRUCTURE South Kalimantan government said the Barito regency
81 suffered the most as almost 60,000 hectares of its areas
Floods in South were flooded, and with inundated areas in Banjar regency,
Kalimantan Tanah Laut regency, Hulu Sungai Tengah regency, Hulu
Sungai Selatan regency, Tapin regency respectively
covering 40,000 Ha, 29,000 Ha, 12,000 Ha, 11,000 Ha,
and 11,000 Ha. And there were some areas which were
isolated due to the damage in the connecting road and
bridges, and with some roads still covered by high water
level.

The South Kalimantan disaster management bureau

(BNPB) said they were yet able to estimate total losses
due to the floods, but estimated almost 400,000 people
in the province were affected with 100,000 people had
to be evacuated and 21 people reportedly killed by
this disaster. The BNPB also said 11 regencies in the
province will not be able to produce rice as the floods
caused crop failure to 18,356 Ha of farm areas, and the
BNPB also said the floods have also caused damages to
the livestock industry in the province. Bank Indonesia of
South Kalimantan predicted inflation in the province will
spike especially in Q1-2020 due to higher price of food
commodities as the effect of crop failures.

Picture 1. Flood in South Kalimantan

Source: Apa Kabar.com

81
 INFRASTRUCTURE President Joko Widodo during a recent visit to South
82 Kalimantan said the continue heavy rain for the last 10 days
Floods in South in the province had significantly increase water volume
Kalimantan discharge by almost 2.1 billion cubic, causing huge floods
which have never happened for more than 50 years. The
President also ordered ministries to repair the damage
infrastructure facilities especially bridges to restore
transportation of goods to isolated areas, and promised
to provide funds for repairing people’s houses damaged
by the floods. The South Kalimantan government said
it will carry out investigation to determine the causes
of the huge floods and will also make evaluation of the
land use in the province to prevent similar disaster from
reoccurring in the future.

The Ministry of Environment and Forestry said the floods

in South Kalimantan were caused by weather anomaly
and not because of shrinking forest areas along the Barito
River as mentions by Walhi and LAPAN, as it recorded
that in 9 January – 13 January 2020 rain intensity in
the province averaged 461 mm/day, eight to nine times
higher than normal. It suggested the South Kalimantan
government to construct soil and water conservation
system like infiltration wells, gully plugs and retaining
dams in areas with extreme water runoff to avoid the same
disaster from happening in the future. Meanwhile, the
Indonesia national aviation and space agency (LAPAN)
thinks the big floods in South Kalimantan happened
because of massive degradation in the forest areas and
shrinking rice field and bush areas for the past 10 years
as the effect of increasing plantation activities, as LAPAN
estimated the size of primary and secondary forest areas
in 2010 – 2020 have been reduce by 13,000 Ha and
116,000 Ha, while plantation concession areas increased
significantly to 219,000 Ha. An environment and forestry
expert said there are several factors causing the floods
in South Kalimantan such as the existences of too many
peatlands, degradation and conversion of forest areas
into plantation areas, illegal logging and expanding
mining activities, and he hoped the government can
maximize its efforts in maintaining the forest ecosystem
in the province.,
82
 INFRASTRUCTURE Market News
83
Floods in South
Kalimantan • PT Pertamina said the coronavirus pandemic has
caused a decrease in its fuel sales to mining companies
due to lower mining activities in the mineral and coal
sector, with huge decrease in sales happened in the
second quarter of 2020, but fuel demand has started
to recover since Q3-2020, although it was still lower
than demand in the same period of 2019. The company
estimated its fuel sales to the mining sector in 2020 to
decrease by 10.0% - 15.0% y-o-y
• PT Transcoal Pacific said that in 2021 the company has
prepared capex of US$ 50.0 million with majority of the
capex will be financed by bank loans. The company
said the capex will be used to buy one floating crane,
four units of pusher barges, and three sets of barges
and tug boats in order to increase its transportation
capacity to 58.2 Mt per annum.
• Trans Power Marine claims that the high tension
between China and Australia has affected in increasing
the company’s coal deliveries by almost two times
since November 2020 but it predicted that the tension
between the countries will only happen temporary, and
therefore the company only prepares capex in 2021 of
IDR 70.0 billion – 80.0 billion which will be used for
ships maintenance.

83
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84