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Indonesia Approves nearly 1 billion tonnes of Coal Production Quotas for 2024

Indonesia approves nearly 1 bnt coal production quotas for 2024

Indonesia’s Ministry of Energy and Mineral Resources (ESDM) has given the nod for total coal production quotas amounting to 922.14 million tonnes (mnt) for the ongoing year. This figure is in line with the approval of the Work Plan and Budget (RKAB) spanning 2024-2026 for 587 companies, as highlighted by Bambang Suswanto, acting director general of Mineral and Coal at the ESDM.

Of the 883 coal companies that submitted their RKAB applications, 121 were met with rejection. However, there’s ongoing re-evaluation for 100 of these rejected applications, potentially impacting this year’s quotas, which could exceed the initially approved figure.

The 2024 approved production quotas notably surpassed the earlier announced annual output target of 710 mnt by the ESDM, raising concerns about a potential supply crunch in the global market, given Indonesia’s leading position as a thermal coal exporter.

Market participants foresee a sharp increase in the country’s production this year, buoyed by the readiness of major miners’ infrastructure for higher output. Even if these quotas aren’t fully utilised, expectations hover around an annual production reaching approximately 830-850 mnt.

However, constraints such as a deficiency in mining, logistics, and port loading capacity could act as a cap on coal exports, thereby constraining overall production. Furthermore, uncertainties loom regarding the capacity of traditional buyers like China and India to absorb the increment, especially considering their efforts to boost domestic supply.

Nevertheless, despite limited growth in exports, Indonesia’s fast economic expansion and the ongoing construction of a new capital city are anticipated to drive up energy consumption domestically, prompting miners to ramp up coal supply.

In summary, while Indonesia’s coal production quotas for 2024 signal potential for increased output, challenges and uncertainties such as infrastructure constraints and shifting global demand dynamics pose significant considerations for the extent of this expansion.

Source: BigMint