Indonesia coal research trip 2018: key takeaways

Following a recent trip visiting coal industry stakeholders in Indonesia, we found the top 10 miners have plans to increase production by 40 Mt in 2018 to take advantage of higher prices. At the same time, stability in prices at higher levels has also helped operators identify and convert some resources to reserves. The increase in production is not only because of the higher prices, but also due to pending expiry of Coal Contract of Works. Also, a recent policy decision on domestic price cap for supplies to electricity producers, has resulted in increased export production as miners look to maximise value from their mines. However, imported coal demand growth has remained sluggish, especially in China and India and with Chinese government focusing on restricting imports, we try to look at the dynamics that are going to impact the Indonesian coal industry in the short term.