Coal Business Prospect in Indonesia

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Coal Business Prospect in Indonesia

Coal Business Prospect in Indonesia

As one among the largest producers and exporters of coal, Indonesia has overtaken Australia since 2005 as the leasing thermal coal exporter. The exported thermal coal mostly consists of medium quality type and low quality thermal coal type. The biggest demand for Indonesia’s thermal coal comes from both India and China. With huge thermal coal production, this production current rate is predicted to last more than 80 years according to Indonesia Ministry of Energy.

Consist of thousands of islands, the coal reserves pockets are spread throughout Indonesia with Kalimantan as the biggest pocket. The three provinces in Indonesia producing the biggest amount of coal are East Kalimantan, South Kalimantan and South Sumatra.

There are basically three reasons driving the increase in coal production and export in Indonesia. Coal remains being the low-cost extraction in power generation. The coal-fired power plants produce more than 39% of world’s electricity and 27% of world’s total energy output. Coal provides less expensive power plants than other energy resources. With Indonesia producing low and medium quality coal, Indonesia is able to sell competitively priced coal products on international market.

Responding to skyrocketed demand for low and medium quality coal from China and India, Indonesia has leaned its position to fulfill demands for those two countries. And, this has given another reason for investors to invest in coal mining in Indonesia.

Beside high demand for thermal coal export, the domestic coal consumption has also risen for around 35% responding to the Indonesia’s current ambitious program to build 35.000 MW power plant. Indonesia government has mandated PLN as the state-owned electricity utility to build the mega project. However, it seems that PLN is unable to fulfill the need increased electricity generation. As a result, private sectors will join PLN to meet the need. And that’s another reason coal investment in Indonesia is promising. Meanwhile, Coal Investors in South Kalimantan is one among the big coal mining companies in Indonesia and is open for new investors.

With economic growth acceleration in emerging and also developing countries, the coal’s price has risen to large extend. Despite the awareness in global community to reduce the fossil fuels’ dependency, the need for this fuel will remain vital energy resources in the foreseeable future. Though renewable energy resources have been being developed rapidly by various countries but fossil fuel energy resources are not neglected. Even in 2012 to 2013, the coal miners were selling so huge amount of coal resulting highly increased revenue and profit.

Indonesia has been expected to become a part in the clean coal mining technologies as a major player and this has promised new future for coal mining in Indonesia. This technology focuses on emissions reduction that has being currently produced by the coal-fired power generation. Indonesia has also starting to receive attention for its CBM or coalbed methane production. Contributing to almost 85% of Indonesia’s mining revenue, coal has significant future for coal investors in Indonesia. The fact that the most densely populated countries in the world depend on Indonesia for coal production has given another reason to start investing coal in Indonesia.