[Ferro-Alloys.com]Indonesian state-owned coal producer Bukit Asam has raised its 2023 output target to 40mn t, up from a target of 37mn t for this year, on expectations that domestic demand for coal will increase.

 

Bukit Asam produced 27.7mn t of coal in January-September and said it expects to hit its 2022 production target. The higher output target for next year is set based on expectations of an increase in coal consumption from the domestic market, the producer added. The Indonesian government has already issued letters of assignment to 125 companies in the coal sector to supply 161mn t of coal to the power generation sector in 2023. Bukit Asam is one of the companies that received a letter of assignment, with an allocation of 12.32mn t for next year.

 

The company said the increase in production will help ensure it can fulfill its allocation quota while also delivering its contractual obligations to existing clients. Bukit Asam will still be mainly focusing on the domestic market, with an expected share of around 55pc, slightly lower than 2022's expected domestic sales share of 60pc.

 

Export sales are also projected to increase next year, fuelled mainly by the company's efforts to expand sales into the European market. Bukit Asam has sold more than 300,000t of coal to Italy in the second half of the year. The company is currently working on expanding its presence to other European countries, but said that this is contingent on whether it will have enough coal left over after fulfilling deliveries to existing clients.

 

Bukit Asam has also inked an initial agreement with logistics provider RMK Energy to ensure its increase in production will not be bottlenecked by logistics constraints. Under the agreement, RMK Energy will transport coal for Bukit Asam with an initial volume of 2.5mn t, which can be increased by an additional 1mn t/yr annually. RMK Energy will also build and maintain coal-hauling roads from Bukit Asam's Tanjung Enim mine as well as other logistics services such as loading and unloading, stockpiling, and barge transshipments, the company said.

 

Higher coal demand from power sector

The Indonesian energy ministry (ESDM) projects coal consumption by Indonesia's domestic power sector will reach 161.16mn t in 2023, up from 128mn t this year, on the back of increased demand.

 

Prospects of increased power demand are being driven by commercial operations beginning at new coal-fired power plants operated by independent power producers (IPPs), as well as economic activity continuing to increase following the Covid-19 pandemic, the ESDM previously said.

 

There were three major coal-fired power projects completed this year and are scheduled to begin full commercial operations in 2023. They will consume a combined 23mn t/yr of coal, the ESDM added.

 

To help address the increase in coal demand from the power sector, the ESDM has issued letters of assignment instructing 125 companies — including coal mining firms, trading firms and co-operatives — to deliver coal to power plants operated by state-owned utility PLN and IPPs. The volume of coal allocated in the letters of assignment will be considered as domestic market obligation (DMO) sales, the ESDM said. Coal producers must make a percentage of their annual output available to the domestic market under Indonesia's DMO policy.argusmedia