* Indonesian coal prices up 30 pct this year
* Govt targets mining non-tax revenues of $2.3 bln
* Production increase may take more than 6 months -assoc
* Exports increasing on price margin -assoc (Adds comment from coal industry association, coal price data)
By Fergus Jensen
JAKARTA, Oct 18 (Reuters) - The current rally in thermal coal prices could extend through to the end of the first quarter of 2017, an Indonesian mining ministry official said on Tuesday, helping cash-strapped miners boost revenues in Southeast Asia's largest economy.
Asian coal prices have surpassed earlier estimates and rallied this year as producers trimmed supply due to concerns over demand. The rally is now among the commodity's top-three bull-runs on record.
Indonesia, where thousands of coal mines went out of business as prices cratered, is now confident of achieving its target of 30.11 trillion rupiah ($2.32 billion) in non-tax revenue from mining this year, Coal and Minerals Director General Bambang Gatot told Reuters.
The world's top thermal coal exporter missed its 2015 target by 43 percent.
"Right now we're almost at 50 percent. With the rise in coal prices hopefully we'll reach it," Gatot told Reuters.
Given the mining sector accounts for around 4 percent of Indonesia's GDP, any rise in revenue would be welcome news for the government at a time when the country's fiscal deficit is expected to widen to 2.7 percent of GDP from the 2.15 percent initially planned.
In the first half of 2016, Indonesia's non-tax revenues from mining reached 12.3 trillion rupiah, about 40 percent of the full-year target, the finance ministry website shows.
Coal prices sank 70 percent between 2011 and 2015 amid worries imports by top consumer China had peaked on measures to combat pollution, and left thousands of mining pits abandoned in Indonesia.
After bottoming in February the Indonesian Benchmark Coal Price (HBA) hit a two-year high of $69.07 this month, and is up around 30 percent this year. The Asian benchmark weekly Newcastle coal price index meanwhile, has rallied 75 percent this year to around $88.35.
The recent jump in coal prices was "good for state revenues, and will give breathing space to coal companies that were trying to keep running to survive," Gatot said.
Like many others in the industry, the Indonesian Coal Mining Association said the highs may not last long and it may take more than six months before production improves.
"(Miners) in Indonesia at least are not doing anything with respect to production yet because they want to see stability of prices," association chief Pandu Sjahrir told Reuters.
Indonesia's coal production will climb to 460 million tonnes in 2017 from a forecast 440 million tonnes this year, he said.
However, with margins of up to $10 per tonne between international and domestic coal prices, local miners were exporting more of the fuel, Sjahrir said.
"Exports are going up," he said, estimating shipments would grow by up to 10 million tonnes in 2016 above an earlier forecast of 360 million tonnes. Exports in 2017 were seen at 380 million tonnes, he said.
$1 = 12,983 rupiah Additional reporting by Gayatri Suroyo; Editing by Himani Sarkar and David Evans