Jakarta, CNBC Indonesia – The Indonesian coal giant, PT Bumi Resources Tbk (BUMI) has also raised its voice amid the continuing fall in coal prices, coupled with the threat of reducing coal consumption from China and India.
Dileep Srivastava, Independent Director and Corporate Secretary of BUMI, said that his party is still optimistic that coal prices will remain high at least until the first quarter of 2022.
Not without reason, according to him, the tighter world coal supply and also the weather factor at the end of the year and early next year is expected to be a factor that coal prices have the chance to remain high until early 2022.
According to him, the current drop in coal prices is also influenced by sentiment, especially from China.
“This is influenced by sentiment (mostly led by China). In fact there is no coal availability in the market spot (Bumi’s coal has been sold out until January 2022, rain will affect production) at this time, so the price spot can stay high. So, there is still hope,” he said via text message, quoted on Wednesday (11/03/2021).
He said demand for coal will continue to increase until early next year, especially when the electricity crisis is still overshadowed. But on the other hand, the availability of coal in the market spot will be limited, so this could trigger coal prices to remain high at the beginning of next year.
“Demand is increasing, but there is no availability this quarter and Q1 2022 could also be tight,” he said.
According to him, the current problem is can the world live with a shortage of electricity? That will happen if the world’s coal supply is not able to meet future electricity needs. Moreover, funding for coal capacity building projects is often rejected.
“Demand will increase but supply is limited. This will lead to the prospect of rising coal prices in the future,” he said.
PT Bumi Resources Tbk (BUMI) targets this year to produce coal in the range of 85-90 million tons, an 11 percent increase compared to the 2020 realization of 81 million tons.
BUMI’s business units engaged in coal mining include Kaltim Prima Coal (KPC), Arutmin Indonesia, and Coal Energy Pendopo. BUMI is said to be Indonesia’s coal giant because almost 14% of national coal production comes from BUMI. As is known, this year Indonesia’s coal production is targeted to reach 625 million tons.
The price of coal on the ICE Newcastle (Australia) market yesterday, Tuesday (02/11/2021), was recorded at US$ 137.1 per ton, down 1.37% compared to the previous day.
Now the price of coal has fallen for five consecutive days. During those five days, the correction reached 31.79%. On October 26, 2021, the price of coal touched US$ 201 per tonne. In fact, coal touched a record high of US$ 280 per ton on October 5, the highest since at least 2008.
Over the past few days, two of the world’s largest coal “eating” countries, namely India and China, announced that they would reduce their coal consumption in order to reduce carbon emissions and achieve carbon neutrality.
India, for example, at COP 26 in Glasgow, yesterday, Tuesday (02/11/2021) said it would achieve carbon-free by 2070. Therefore, the country will reduce fossil energy and will increase the installed capacity of renewable energy by 2030.
Most of it is solar power, from 450 Giga Watt (GW) to 500 GW.
As much as 50% of the country’s energy needs will come from renewable sources. India also announced that the carbon intensity of India’s economy – emissions generated per unit of GDP – will decrease by 45% in 2030, from 35% previously.
After India, China also revealed that it would reduce the average coal consumption of power plants to 300 grams per kilo Watt hour (kWh) by 2025.
China’s National Development and Reform Commission (NDRC) also said inefficient power plants would also be shut down gradually. This announcement was made by China at the end of the COP26 climate summit in Glasgow, England. The Chinese president himself was not present at the event in person.
(wia)
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