Snapshot of Indonesia’s coal industry

JAKARTA, Nov 19 (Reuters) – Indonesian plans to cap coal exports to meet domestic demand will not hit global supplies in the near term, but could start to bite in three to five years as new power plants stoke demand in the world’s biggest exporter of thermal coal. Here is a snapshot of Indonesia’s coal industry.

RESOURCES :

Indonesia has total identified coal resources of 104.76 billion tonnes, with 86.61 percent consisting of low-quality coal of below 6,100 kcal/kg on an air-dried basis. It has mineable reserves of 20.99 billion tonnes. About 99 percent of the identified coal resources are located on the island of Sumatra and in the South and East Kalimantan provinces of Borneo. The rest is scattered on other islands. But coal resources are expected to rise further, as big areas such as Papua, have been largely unexplored.

EXPORTS Indonesia, the world’s biggest exporter of thermal coal, ships more than 70 percent of coal to the Asian market, with Japan the top buyer. Other key buyers include Taiwan, South Korea and India. The remainder is exported to Europe and America. Indonesian sub-bituminous coal is being increasingly used by power plants in major buyers since its low content of sulphur and ash makes it more environmentally friendly. Indonesian coal exports rose to 140.5 million tonnes in 2008, from 38 million tonnes in 1997.

DOMESTIC CONSUMPTION :

Electricity accounts for about 60 percent of Indonesia’s total domestic demand for coal, or 68 million tonnes this year. The use of coal for power generation is expected to increase in line with the government’s crash programme to add 10,000 Megawatts (MW) of generating capacity to ease chronic power shortages, with the first phase due to be completed in 2011 and consisting of coal-fired power plants.

INFRASTRUCTURE :

Indonesia is an archipelago of more than 17,000 islands and this allows it to easily increase coal shipments using waterways. Most coal mines in South and East Kalimantan are located near rivers or the open sea. There are plans underway to expand or build more onshore coal terminals, including one in West Java, with annual handling capacity of 5 million tonnes from Sumatra. State-owned coal miner PT Tambang Batubara Bukit Asam Tbk ( PTBA.JK: Quote, Profile, Research ) is an exception and it uses a railway to transport coal from its mine in Tanjung Enim in South Sumatra. In the future, railways may become a key mode of transport, with a number of projects in the pipeline. The government plans a 1,461 km (908 miles) railway in Kalimantan, Indonesia’s key coal producing area in Borneo. Bukit Asam also has approval for a 302-km rail line connecting its mine in Central Bangko in South Sumatra to the port of Lampung, on the tip of Sumatra island. [ID:nJAK347673] RAK Minerals & Metals Investments, a UAE investment fund, will also spend $1 billion to develop a rail link and terminal to ship coal from East Kutai, in East Kalimantan. [ID:nSP409627] Sources: Reuters, Energy and Mines Ministry, Indonesia Coal Producers Association ( Reporting by Fitri Wulandari; Editing by Ed Davies and Clarence Fernandez ) news sources from reuters india