Coal output from Indonesia, the world’s largest exporter of the fuel for power-stations, may rise by 5.2 percent this year.
The country may produce 400 million metric tons as long as prices stay above $92 a ton, Bob Kamandanu, the chairman of Indonesian Coal Mining Association, said in an interview while attending a conference in Singapore today. Output was 380 million in 2012.
“Indonesian producers managed to maintain production growth last year amid price distress,” Kamandanu said. “If prices range from $92 to $95 a ton this year, miners can increase output.”
Power-station coal at the Australian port of Newcastle, a benchmark grade for Asia, fell to $94.29 a ton in 2012, from more than $120 in 2011, according to data from IHS McCloskey. Prices slid last year as slower economic growth in China and Europe cut demand while Colombia, the U.S. and other exporters increased shipments to Asia.
The group forecasts that Newcastle price will average from $92 to $96 a ton this year, he said. The price was $92.85 a ton in the week ended Feb. 15.
“Demand for the fuel remains high,” Kamandanu said. “We see that India demand will pick up this year. China also increasingly need lower grade quality for blending with their domestic coal.”
Low-grade coal will lead growth in Indonesia’s future supply while output of higher grade quality may be stagnant in the coming years, he said. About 93 percent of the country’s reserves, an estimated 28 billion metric tons in 2011, are below top quality, according to the government’s data.