JAKARTA: The current rally in thermal coal prices could extend through to the end of the first quarter of 2017, an Indonesian mining ministry official said on Tuesday, helping cash-strapped miners boost revenues in Southeast Asia’s largest economy.
Asian coal prices have surpassed earlier estimates and rallied this year as producers trimmed supply due to concerns over demand. The rally is now among the commodity’s top-three bull-runs on record.
Indonesia, where thousands of coal mines went out of business as prices cratered, is now confident of achieving its target of 30.11 trillion rupiah ($2.32 billion) in non-tax revenue from mining this year, Coal and Minerals Director General Bambang Gatot told Reuters. The world’s top thermal coal exporter missed its 2015 target by 43 percent.
“Right now we’re almost at 50 percent. With the rise in coal prices hopefully we’ll reach it,” Gatot told Reuters.
Given the mining sector accounts for around 4 percent of Indonesia’s GDP, any rise in revenue would be welcome news for the government at a time when the country’s fiscal deficit is expected to widen to 2.7 percent of GDP from the 2.15 percent initially planned.
In the first half of 2016, Indonesia’s non-tax revenues from mining reached 12.3 trillion rupiah, about 40 percent of the full-year target, the finance ministry website shows.
Coal prices sank 70 percent between 2011 and 2015 amid worries imports by top consumer China had peaked on measures to combat pollution, and left thousands of mining pits abandoned in Indonesia.
