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Indonesia Warns Coal Output Could Decline in 2017

May 30, 2016 at 19:00 by Andrew Moran

Indonesia projects that coal production could decline next year, says a new CNBC report. With prices reaching their lowest level in a decade, smaller miners have faced many obstacles. In response to these lower prices, the smaller miners will reduce their coal output in 2017.

The country is the world’s top thermal coal exporter. According to government estimates, Indonesia produced 392 million tonnes of coal last year and 419 million tonnes of coal this year. The government also projects to churn out 409 million tonnes in 2017.

Meanwhile, it shipped 350 million tonnes of thermal coal last year, which represents nearly half of the 880 million tonnes of searborne thermal coal traded in 2015. This industry is projected to see a decrease of 30 million tonnes this year, a drop from last year’s 45 million tonnes.

Coal prices have tumbled to their lowest levels since 2006 because of new supply from South America, falling oil prices and slowing global demand. Smaller miners have had a difficult time in marketing their coal to the global market in recent years because of the international green energy push.

With governments all over the world, from China to the US, investing in renewable energy, Indonesia could see its key industry crumble. The US has seen its coal production fall to its lowest level since 1986. China’s National Energy Administration has suspended much of its coal-fired power plants as it turns to solar, wind, and geothermal. This means China will be a major exporter of coal, which puts it at direct competition with Indonesia.

The Southeast Asian country was one of the many nations to receive part of the $1.6 billion loan from multilateral development banks. These funds are meant to develop energy projects, but Indonesia has used its share of that money to prop up its coal industry.

Indonesian coal mining firms have also faced a barrage of protests. This month, climate activists stormed two cranes at the Cirebon Coal Power Plant to apply yellow banners calling for the end of coal. Thousands also protested against Indonesia President Joko Widodo‘s plan to construct more coal-fired power plants.

Arif Fiyanto, the Climate and Energy Campaigner at Greenpeace Indonesia, released a statement on Sunday:

“Coal has a dirty history in Indonesia ranging from land grabs, violence against local communities, polluting our air and exporting climate change to the rest of the world.”

This is not stopping Indonesia, though. The country is still looking to purchase higher quality coal at a cheaper price from Australia, Colombia, and South Africa.

If you have any questions and comments on the commodities today, use the form below to reply.

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