The government of Indonesia has been trying hard to control their coal output and export. The output is pushed down in order to preserve the coal for future generation. Government is also increasing domestic consumption following the electricity program of mega project 35,000 MW that more than 50% of the electricity production is made from coal-fueled power plant. Yet, regardless of the control, coal output and export is on the rise in 2017, due to higher prices and demands from global worlds.
In 2017, coal production is calculated to be about 18% higher than government mandated target of 413 million metric tons. As the coal prices recovered from a five-year collapse, miners maximize their output to take the advantages and compensate the previous losses. In addition, Indonesian coal is in high demand by many countries in the world.
The biggest customers of Indonesian coal are China, India, South Korea, and Japan. Although export to China is shrinking over the pass three years due to the rise of China’s domestic output, Chine is still one of the top of Indonesia’s overseas shipments. From January to August 2017, it is recorded the value of Indonesia’s coal export to China reached USD 1.68 billion. Indonesia is on the second place of China’s coal partners under Australia who take the first place.
India is also potential market for Indonesia’s coal. In 2015, export to India is recorded to be 34% of the total Indonesia’s coal export. The number rose greatly from 28% in 2013. India is on the great development that requires energy while coal is low cost resources to meet their energy demand.
Apart of the four countries, demands are also coming from other countries. The neighboring countries such as Malaysia, Vietnam, and Philippines are small examples of the countries that make market diversification wider.
Demand from Malaysia is high. The record stated 10 million tons of coal is imported by Malaysia from Indonesia in 2017. Malaysia needs coal because about 45% of their energy supply comes from coal-fueled power plant. The great development in some regions makes the energy demand rise, hence coal demand in increase. It is predicted that Malaysia will need 40 millions tons of coal annually by 2020. Importing coal from Indonesia is so far the best solution for Malaysia since the country does not have enough coal output.
Vietnam is also highly needs coal for their energy production. Coal is low cost hence it is suitable for developing country like Vietnam. Due to lack of coal reserves, Vietnam could not fulfill their need of coal themselves. Import becomes their solution, while Indonesia is their best choice.
Philippines is another potential market for Indonesia’s coal. The estimation is about 15 million tons of coal is shipped from Indonesia to Philippines every year. Indonesia is the highest coal supplier for Philippines as 70% of their coal import comes from Indonesia. Unfortunately, coal trade between two countries was disturbed by a series of hijacking incident in Philippines southern sea in 2016. The governments of two countries are working hard to solve the problem.
There are many other countries, which need coals for their energy. Even countries who try to convert their energy production into more environmental-friendly still need coal to meet their increasing energy demands. For example is Sri Lanka. The country works hard to convert their electricity production to solar energy. However, they still import coal to generate energy for industry.
Indonesia still takes the top place of thermal coal exporter. Known as low-grade coal, demand to Indonesia’s coal is high due to the low cost. Therefore, coal sector is said to be one of the promising investments in the country.