The increase in coal prices added to the burden on the textile industry, which is currently recovering. Secretary General of the Indonesian Textile Association (API) Rizal Tanzil Rakhman said the impact would be very significant because most textile production still uses coal.
Rizal said that the increase in coal prices will also raise production costs by 20 percent.
"This further adds to the burden and slows down the acceleration of recovery," he said.
He hopes that the government will immediately intervene to meet domestic coal needs, especially for industrial needs.
Rizal even encouraged the government to raise the obligation to fulfill coal for domestic needs or the domestic market obligation (DMO).
"Hopefully the DMO can increase so that the domestic market can be wider, the price of [coal] can go down more," he continued.
So far the companies have been tightening and consuming efficiency. However, if prolonged, this will result in a decrease in production utilization, which is estimated to be above 50 percent by the end of the year.
"The market has not fully recovered, especially domestically, so if this is not strong enough, plus costs, we will automatically decrease utilization," he explained.
Previously, it was known that the government through the Ministry of Energy and Mineral Resources (ESDM) had set the percentage of coal sales for domestic needs at 25 percent of the approved annual production plan. The amount is, among others, for the supply of electricity, public interest, and raw materials or industrial fuel.
The government has tightened the regulation through the Decree of the Minister of Energy and Mineral Resources Number 139.K/HK.02/MEM.B/2021 concerning the Fulfillment of Domestic Coal Needs on August 4, 2021.
As is known, the Ministry of Energy and Mineral Resources (ESDM) announced the reference coal price (HBA) in September 2021 to reach US$150.03 per tonne in line with the increase in coal demand from China.
The Head of the Communications Bureau for Public Information Services and Cooperation of the Ministry of Energy and Mineral Resources Agung Pribadi said that the figure was up US$19.04 per tonne compared to August 2021, which was US$130.99 per tonne. This condition was caused by an increase in coal demand from China.
In addition, China's coal demand for power generation has also exceeded the domestic coal supply capacity.
“This is a pretty phenomenal number in the last decade.
China's high demand exceeds its domestic production capacity, as well as increasing demand for coal from South Korea and the European region in line with high natural gas prices," he said.