High Demand Projected, Here's the Prospect of Coal Business in 2025

Domestic and global coal demand is projected to increase by 2025. Although it must deal with several additional domestic burdens including the government's ambition to leave fossil energy sources towards new renewable energy (EBT). Related to this, the Indonesian Coal Mining Association (APBI) said it is optimistic about the performance of the coal industry even though the stagnation of coal prices cannot be denied.

APBI Executive Director Gita Mahyarani said that the increase in coal demand next year was driven by two factors. Namely domestic coal demand and export demand which is still quite high. “The coal business in 2025 the driver is still domestic and export coal demand to maintain energy security,” said Gita when contacted by Kontan, Monday (30/12).

The increase in domestic demand, said Gita, can be seen from the potential increase in the Coal Domestic Market Obligation (DMO) in 2025 which reached 229.3 million tons or 4.05% higher than the DMO target throughout 2024 which amounted to 220 million tons.

“When it comes to increasing production, some of our members have increased production, some have remained, and some are still in the exploration stage,” added Gita.

Similarly, Executive Director of the Indonesian Mining Association (IMA) Hendra Sinadia said that his party sees that coal prices next year will not be able to climb upwards. “For the price outlook for both coal and some of our superior minerals, it looks like the average price in 2025 is still relatively the same as in 2024,” he told Kontan, Monday (30/12).

Despite price constraints, Chairman of the Indonesian Mining Experts Association (Perhapi) Sudirman Widhy said that for next year, domestic electricity needs still cannot be separated from coal energy sources.

“Next year, domestic electricity demand will increase for the development process in Indonesia. Especially with the government's 3 million house program plan, PLN will certainly need additional electricity supply for households,” he told Kontan, Monday (30/12).

This increase, he said, has not been calculated with the increase in electricity use in the industrial sector. With downstream steps, the use of electricity with coal energy raw materials is also considered to be increasing.

“With the large amount of coal reserves and resources in Indonesia, in 2025 coal will still be the main support for supplying energy in Indonesia, especially electricity,” he explained.

Increased Production Amidst Shift to EBT

Despite pursuing an increase in the mix of new renewable energy (EBT) compared to the use of fossil-coal energy, Indonesia actually recorded an increase in production volume until the end of this year. Based on data from the Ministry of Energy and Mineral Resources (ESDM), domestic coal production reached 802.31 million tons as of Thursday (26/12). This realization has reached 113% of the 2024 production target of 710 million tons.

In detail, domestic absorption was recorded at 361.48 million tons. Meanwhile, the realization for exports amounted to 412.5 million tons. The realization for the domestic market obligation (DMO) reached 162.03 million tons.

Production exceeding the target shows that Indonesia's dependence on this black gold commodity is still high. This is also reflected in the renewable energy mix, which until the end of the year only reached 14.1%.

As for APBI, from a total of 91 coal producer company members, there is an increase in production volume throughout this year which is predicted to touch 534 million tons.

“There is an increase, but the percentage is probably below 5%. With a (production) volume between 526-534 million tons. Higher than the 2023 (volume) of 518 million tons,” Gita explained.

The same expression was also expressed by the Chairman of the Mining Vocational Board of the Indonesian Engineers Association (BK Pertambangan PII) and former Chairman of the Indonesian Mining Experts Association (Perhapi) Rizal Kasli, who said that coal mining will still survive despite the transition to green energy.

“To achieve better performance, Indonesia needs to provide stimulus that supports investment such as infrastructure, financing, technological innovation, and human resource development in the mining sector,” he said.

Exports Potentially Increase in 2025

The potential increase in coal demand next year is also supported by data from the International Energy Agency (IEA), which predicts that global demand for coal will reach a new record, at least until 2027.

In a Bloomberg report, Wednesday (18/12), the IEA sees coal demand will increase to nearly 8.9 billion tons in 2027, or about 1% higher than the 2024 level.

In terms of miners, Sudirman said that next year big changes will also occur in the coal industry, given the president-elect of the United States (US) President Donald Trump, who is considered pro-coal.

“There is a tendency for the need for coal commodities in the global scope to increase, one of the things that drives the projected growth in coal demand is the election of Donald J. Trump as President of the United States, which tends to still support the fossil energy sector such as coal,” explained Sudirman.

For the international market, the demand for coal supply is said to increase, especially for the two largest importing and populous countries in the world, namely China and India.

Meanwhile, based on data from the Central Statistics Agency (BPS), Indonesia's coal export volume in the third quarter of 2024 increased by 15.04% YoY, and on a monthly basis increased by 2.62% MtM which reached a volume of 34.64 million tons, with an export value of US$ 2.54 billion.

Source:

-https://industri.kontan.co.id/news/permintaan-diproyeksi-tinggi-begini-prospek-bisnis-batubara-pada-2025

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