Indonesian Coal Miners To Scale Back Production As Margins Start To Pinch
Posted in the Mining Forum
Since: Sep 12
#1 Sep 5, 2012
Rising costs and falling thermal coal prices are expected to see Indonesian steam coal producers scale back production in 2013. John O’Neil from Energy Publishing’s Indonesian Coal Report looks at the half yearly results of industry heavyweights.
While most coal producing regions are starting to feel the pinch of the rapid decline in coal prices in recent months, Indonesia has been hard hit because of the low margins between the cost of production and sale price. Indonesia’s mining majors have reported falling profits for the first half of 2013 and many analysts are now tipping the scenario is unlikely to improve before 2H 2013.
Not all of Indonesia’s largest coal producers are scaling back production yet, but rising costs and falling prices are squeezing their margins. With major producers having most of their 2012 production contracted and often at fixed prices negotiated earlier in the year, the impact of the current low spot prices won’t be fully felt until next year.
To compensate, some producers are expanding production to increase revenue while others have a greater focus on efficiency and watching production costs to protect margins.
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