Coal Production

Talked to a prominent coal traders. He saw some heavy machineries lying idle, excavator tumbled. Even his 4 wheel drive land cruiser with big wheels was spinning around on the road to the mine. Rain keeps pouring East Kalimantan and some coal mines there are having problems to mine and transport coal. He would not be surprised if there will be a lot of delays in shipments due unfavorable weather. This is especially true to small to mid size miners which may have to completely stop transporting coal and only some big guys such as KPC & Arutmin whose good hauling road could resume transporting coal when the rain stops. He expects around 10% drop of production until end of this year as miners cannot do normal mining activities. Even Adaro has really toned down their production target for this year.

What's going on here? Indication is that we are going to get a major La Nina event. According to NOAA (National Oceanic & Atmospheric Administration). Conditions are currently stronger at this time of year for a powerful La Nina than they have been since 1955.