PT Indika Energy Tbk (INDY) has set a coal production target of 35.1 million tons this year.

Referring to the Indika Energy 2020 annual report, on Monday (12/4), the plan to achieve this production comes from business entities, namely PT Kideco Agung Jaya around 34 million tons and PT Multi Tambang Utama Jaya around 1.4 million tons.

Management assesses that the global economic recovery will encourage improvement in industrial activity. China's policy will remain the main factor for coal price movements.

As the largest coal importer, China is expected to increase the demand for thermal coal from Indonesia, especially since there is a ban on import quotas from Australia. Moreover, a very severe winter and a shortage of coal due to the bottleneck of domestic coal supply in China will increase coal demand.

For supply, coal from seaborne is experiencing tight supply due to the heavy rainy season in Kalimantan, where many coal mines are flooded.

The Newcastle Index Price at the end of December 2020 showed signs of improvement and was at an US$80.5 per ton price compared to US$67.7 per ton at the end of December 2019.

Noble estimates that demand for seaborne thermal coal will increase by 3.8% in 2021 due to increased consumption in China, India, and Southeast Asia due to improving economic activity.

In the domestic market, the Indonesian government has a target to maintain national production at 550 million tons for 2021, of which 137.5 million tons are allocated for domestic needs. Coal is still the main contributor to domestic power generation in the long term.

The national electricity supply is estimated to grow by 4.05% per year during 2020 - 2029, of which half of the new capacity will come from coal.

Under the long-term Electricity Supply Business Plan (RUPTL) 2020-2029, coal-fired power plants are estimated to contribute 60.7% of the national energy mix in 2025 and increase to 65% in 2029.