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Indonesia's Ministry of Energy and Mineral Resource (ESDM) would re-evaluate the formula of forming the current reference coal price, or HBA, which market participants argued the price was not in line with the reality.
The HBA is a monthly average price based 25% each on Platts Kalimantan 5,900 kcal/kg GAR assessments, Argus-Indonesia Coal Index 1 (6,500 kcal/kg GAR), Newcastle Export Index (6,322 kcal/kg GAR) and globalCOAL Newcastle (6,000 kcal/kg NAR).
It is used as the price basis for 77 Indonesian coal products and calculating the amount of royalty producers need to pay. The HBA for January stood at $305.21/t, up from December's $281.48/t.
"We are conducting an evaluation because previously we used four indices, it turns out that these four indices have too high a gap. But what do we really want the reality to be? This will be in the evaluation stage later," the minister Arifin Tasrif said January 24 as quoted by local media CNBC Indonesia.
Later, this price will be used directly in buying and selling spot coal commodities for one month at the point of delivery of sales on a Free on Board basis.
It is unknown when the evaluation will be completed.
The HBA evaluation is thought as one of the steps to reshape the domestic supply system. Indonesia initially planned to build a Public Service Agency (BLU) to deal with fee collections from mines and cover the difference between market prices and DMO price cap, which is set at $70/t for supply to the sector.
With the BLU, the government allows coal miners to sell domestically at the market price gauged by the HBA to ensure the domestic supply reality.
Earlier this month, the government said it was working to switch the type of agency from the BLU to Managing Agency Partner (MIP), but the essential content may be hardly changed.
(Writing by Alex Guo Editing by Harry Huo)
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