Forecasting on Indonesian Coal Production and Future Extraction Cost: A Tool for Formulating Policy on Coal Marketing

Abstract

Since 2011 Indonesia has become the world’s largest exporter of steam coal. Two supporting factors of Indonesia to be the largest exporter are its enormous production and low operating cost. This paper foresees the production and extraction cost of Indonesian coal in the coming period to evaluate marketing policies and estimate the cost of Indonesian coal supply in domestic market as well as in export market. The production forecasting is carried out by Gompertz curve. Peak production of Indonesian coal is expected to take place in 2026. Moreover, the extraction cost in coal basins which produce high calorific value of coal, in accordance to the operating cost forecasting, is higher than the one with low calorific value of coal due to its higher stripping ratio. Three main basins of Central Sumatra, Tarakan, and Barito basins play major rule in supplying coal for domestic use in short term. And other coal basins such as South Sumatra, Kutai, Bengkulu, and Ombilin basins provide long term supply in the domestic and export markets.