Challenging Prospects for Indonesia's Coal Trade 2025
Indonesia's coal trade outlook will be more challenging amid a planned decline in demand from China next year. Although a number of Southeast Asian countries are projected to increase demand, the performance of this commodity is also determined by the global geopolitical situation.
Indonesia's coal commodity trade in 2025 is overshadowed by plans to reduce demand from China and continue to heat up the global geopolitical map. Even so, entrepreneurs are optimistic that demand for black gold will remain healthy next year.
Coal is still one of Indonesia's leading export products despite the world's efforts to switch to the use of clean energy. Even so, this commodity still supports power plants in the country.
This year, the Ministry of Energy and Mineral Resources (MEMR) has set a coal production target of 710 million tons. Based on Mineral One Data Indonesia, this target was almost exceeded with the realization reaching 707.52 million tons as of 13 November 2024.
Of this amount, around 669.21 million tons have been sold to the market. This realization is divided into 356.13 million tons for export and 313.08 million tons for the domestic market. The current situation is not expected to be much different from the projection next year.
Acting Executive Director of the Indonesian Coal Mining Association (APBI) Mahyarani said that the 2025 coal trade performance will be influenced by the geopolitical situation, weather and government policies that will have an impact on production costs.
“The projected performance of the coal sector next year is not expected to be much different from this year. Supply and demand are still quite healthy at their equilibrium points,” she told Bisnis, Wednesday (13/11/2024).
Furthermore, Indonesia's coal demand is expected to remain dominated by China even though the country has stated plans to reduce imports of the fossil energy. This condition is expected to be offset by an estimated increase in demand from a number of Southeast Asian countries.
Shipments to India are also projected not to change much despite the black gold industry in the Subcontinent trying to boost domestic production. In the midst of the geopolitical situation, the association believes that this superior export product will continue to support Indonesia's trade performance in 2025.
“Coal products will continue to support the trade balance when looking at economic developments in the domestic, Southeast Asia and China in 2025,” he said.
China continues to be the destination country for Indonesian coal with a trade value of up to US$11.32 billion during January - September 2024. Then followed by India US$5.54 billion, Japan US$4.41 billion, Malaysia US$3.29 billion and Singapore US$3.36 billion.
In total, Indonesia's coal exports until September 2024 reached US$40.73 billion. Meanwhile, last year, shipments of these commodities abroad touched SU$59.49 billion.
CONTINUATION OF COAL DOWNSTREAMING
Although coal products continue to face global efforts to spur the use of clean energy, the government ensures that the downstreaming of this commodity into dimethyl ether (DME) or coal gasification continues in the era of President Prabowo Subianto.
“That is one of the future programs that we will encourage as a form of coal turnover. That is being pursued,” said Minister of Energy and Mineral Resources Bahlil Lahadalia at the Ministry of Energy and Mineral Resources Office, Monday (4/11/2024).
He also emphasized that the former Coal Mining Concession Work Agreement [PKP2B] which received an extension to a Special Mining Business License (IUPK), was obliged to carry out coal turnover.
However, Bahlil said the final product of coal turnover is not required to be DME. DME itself has been targeted to be a substitute for liquefied petroleum gas (LPG). “Downstreaming is mandatory, but not necessarily DME,” said Bahlil.
The new stone gasification project is still facing a number of challenges. In fact, it is rumored that there are parties who are trying to scuttle the government's efforts. Bahlil said a number of parties were playing around trying to prevent the coal gasification project into DME from being realized.
In fact, DME is one of the turnaround projects to replace LPG, while reducing Indonesia's LPG imports, which are currently recorded at 6 million tons.
“In the past, Mr. President [Jokowi] had made a groundbreaking to make DME to manage low-calorie coal into LPG, but I know that someone intercepted it when I was investment minister,” he said on Thursday (26/9/2024).
After being appointed Minister of Energy and Mineral Resources since August 2024, he began to anticipate and did not hesitate to fight those who played with the project. “No way, in the past I was alone anyway, now I'm sorry this item has a patent, there are few patents on this item,” he explained.
DME development is an effort to substitute LPG, which is still imported. The Ministry of Energy and Mineral Resources noted that Indonesia still imports LPG up to 6 million tons per year with a value of US$3.45 billion. In fact, Indonesia has to spend significant foreign exchange for LPG imports of around Rp450 trillion every year to buy oil and gas, including LPG.
However, a number of DME projects that are currently being worked on have not yet seen tangible results. projects owned by PT Bukit Asam Tbk. (PTBA) to PT Adaro Energy Indonesia Tbk. (ADRO) have stalled.
Source : https://www.apbi-icma.org/news/onlineupdates/prospek-menantang-perdagangan-batu-bara-indonesia-2025