Indonesia’s Bayan halts coal output at subsidiaries

March 30, 2020, 8:38 pm | Admin

Indonesian coal producer Bayan Resources is to halt production at two of its mining subsidiaries until 30 April as a precautionary measure amid the global coronavirus pandemic.

Its Tabang and Fajar Sakti Prima subsidiaries operate mines in Indonesia's east Kalimantan province and produce a combined 28mn t/yr of coal with a calorific value of GAR 4,400 kcal/kg.

"We believe this will help us to prevent any possible spread of Covid-19 at the two mining areas which employ quite large numbers of workers," Bayan said.

The company said its other mines and its barging operations as well as its ports, including Balikpapan and Lubuk Tutung, are operating normally and that it has enough inventories to continue supplying its customers for up to three months.

A number of Chinese coal buyers have said in recent weeks that possible mine closures in Indonesia could result in a potential supply shortfall, at a time when Chinese businesses and industry are reopening as coronavirus restrictions are eased.

Bayan said earlier this month that it expects to sell 35mn-38mn t of coal this year, up from the 29mn t it sold last year. It was planning to release unsold inventories from last year and this accounted for the expected increase this year. The firm previously said it expects to produce 31mn-33mn t of coal in 2020, in line with last year's production of 32mn t.

India was the biggest buyer of Bayan's coal last year, accounting for 25pc of the firm's 29mn t overall sales volume.

But Indian demand for Indonesian coal has been dented by a nationwide lockdown. India's coal-consuming industries, such as cement producers and sponge iron producers, were forced to close as the lockdown started on 25 March to contain the spread of the coronavirus, triggering disruptions and declarations of force majeure by a number of Indian ports.

Gangavaram, one of India's largest ports for imported coal, said last week that its operations "including but not limited to unloading, loading and receipts and despatches, will be severely and adversely affected" amid lockdowns in the states of Telangana and Andhra Pradesh. Gangavaram handled 18.69mn t of coal in 2019, equating to 8pc of India's total imports of 228.74mn t last year, according to data from shipbroker InterOcean.

Indonesia is the world's largest thermal coal exporter. It shipped 456.36mn t of all types of coal last year, a 6.4pc increase from 2018. Thermal coal accounted for 428.83mn t of last year's exports, up by 35.2mn t from 2018.

Last modified on March 30, 2020, 8:39 pm | 3826