The energy supply embargo from Russia pushed the Reference Coal Price (HBA) in April 2022 to reach the level of US$ 288.40 per ton. Demand for coal from the European market also has the potential to increase. Executive Director of the Indonesian Coal Mining Association (APBI) Hendra Sinadia said several companies are currently exploring opportunities to export coal to the European market. Nevertheless, Hendra said that there are a number of important points that are a concern in the fulfillment of coal from Indonesia to the European market.

"It really depends on the quality of the coal they need," explained Hendra, Tuesday (5/4).

Hendra explained, generally the European market requires medium to high grade coal. Unfortunately, not many Indonesian companies have slots of such quality coal.

In addition, freight costs are also a consideration. Indonesia is considered less profitable for fulfillment in the Atlantic Market than competing countries such as South Africa, Australia, Colombia to the United States.

Hendra has not been able to estimate how big the increase will be from the European market. On the other hand, the condition of rising coal prices will also have a positive impact. However, for the domestic market, in general, the selling price for the electricity and industrial sectors has been set at US$ 70 per ton and US$ 90 per ton, respectively.

"Depending on the need, the biggest demand is cement, then smelters, paper, fertilizers and textiles. According to the latest regulations, only smelters have no fixed price," said Hendra.

Referring to existing data, for the last year alone, domestic coal consumption in total reached 133.04 million tons. The electricity sector dominates demand with a volume of 112.13 million tons.

Meanwhile, Director of PT Bumi Resources Tbk (BUMI) Dileep Srivastava revealed that the sanctions received by Russia had the potential to encourage coal demand for the European market. However, Dileep assesses that under current conditions, the domestic industry is quite difficult to meet new demands.

In particular, BUMI itself is still facing weather challenges in its production activities. "Coupled with the priority we have set for domestic sales (for) our DMO fulfillment rather than exports. (This) has resulted in several export delays," Dileep told Kontan, Tuesday (5/4).

Dileep added that the fulfillment efforts for the export market are expected to be pursued as the weather improves. Meanwhile, for the first quarter of 2022, BUMI's coal production is expected to reach around 17 million to 18 million tons.