Corona Virus Does Not Affect Coal

MINISTRY OF ENERGY AND MINERAL RESOURCES

REPUBLIC OF INDONESIA

PRESS RELEASE

NUMBER: 067.Pers/04/SJI/2020

Date: 12 February 2020

Corona Virus Does Not Affect Coal

The outbreak Corona virus or Covid-19 in the past month has not created a significant impact on Indonesian mining sector, particularly coal. This is informed by Director General of Mineral and Coal, Bambang Gatot Ariyono, in a hearing with members of Commission VII of House of Representatives in Nusantara Building in Jakarta, Tuesday (11/2).

Although China, the center of Covid-19 outbreak, is Indonesia's largest export market, all investment activities and operation of coal still run normally. Moreover, exports have been intended to supply energy for power plants, not industrial goods. About 30% of Indonesia's total coal production is exported to the Bamboo Curtain country.

"Corona virus, from coal side, has not made any impact (yet), it's only been a little while. Maybe because exports are used for energy, not as industrial commodity," explained Bambang.

If Covid-19 outbreak occurs for longer time, continued Bambang, there is always the possibility the outbreak will put negative sentiment on coal. "If it's lasted for six months, we can see the impacts. I don't know when it (the virus) can be cured. We'll see," he confirmed.

So far, the government has not received any reports on disruption of Indonesia-China trade in the mineral and coal sector due to Covid-19. "No company has come to us, requesting to reduce production or export to China" said Bambang.

Uptick in February HBA

Covid-19 has caused the Chinese industry to move slowly, leading to a thin stockpile. Declining supply of Chinese coal has led to an uptick in the Coal Reference Price (HBA) of February 2020 to USD66.89 per ton. "Coal prices have picked up," said Bambang.

This month's HBA has picked up compared to January's, which was at USD65.93 per ton or increasing by 1.45% (USD0.96 per ton). The HBA prices are set out in Decision of Minister of EMR Number 43 K/32/MEM/2020 which starts to apply from 1 February 2020.

Other dominant factors creating the HBA prices are the bushfires occurred in Australia and the rising demand for coal in a number of countries such as Japan and South Korea during the winter. Meanwhile, India and China have curbed imports and used domestic production.

The February HBA will be used for direct (spot) sales in the whole month for Free on Board the vessel (FOB vessel) contracts.

The HBA refers to the average of four coal price indexes commonly used in the global trade, namely Indonesia Coal Index (ICI), Newcastle Export Index (NEX), Globalcoal Newcastle Index (GCNC), and Platt's 5900 of the previous month. (IY)

Head of Bureau of Communication, Public Information Services, and Cooperation

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