Potential Coal Market for Local Consumption and Export
Indonesia’s coal mining sector has still being one of the most potential mining businesses with prospective future. Market for coal product has actually been risen due to increased local consumption and new potential markets in India and China. Despite the shift toward renewable energy resources in global scale, developing countries like India are still dependent on coal for low cost power plants. Indonesia itself has also increased its local consumption following the new state’s mega project of 35.000-MW electricity program to fulfill the domestic need.
The recent studies show how coal consumption in Indonesia remains popular although this mining has damaging environmental impacts. And with the ambitious 35.000 MW electricity program, more than 50% of electricity generation is still made from coal-fueled power plant. Even more, the new government has also pushed industrial and infrastructure development and it results in increased demand for electricity. And for more electricity to be generated, the coal consumption should be increased. Well, based on assumption of 5% to 6% Indonesia’s economic growth between 2015 and 2017, the domestic coal consumption to generate electricity will increase by around 10% in the next 10 years.
Despite the declining demand for coal in global scale, Indonesia is still a country that overlooks gradual domestic consumption rise alongside India as developing country. This increase has been mainly driven by higher demand made by cement industry in the country and increased number of steam-fueled power plants. According to the Indonesia Ministry of Energy and Mineral Resources, the domestic coal consumption has increased from 23.58 million tons to 25.52 million tons within only 6 months from January to June. It shows the increase of 8%.
The rise of domestic coal consumption is not followed by rise in exported coal as the coal export has dropped reaching almost 32% responding to lower demand from two major importers which are India and China. However, the decreased export is predicted to be only temporary because coal is still considered to be the answer for low cost electricity generator for developing countries.
Meanwhile in domestic coal market, the establishment of Cilacap and Celukan Bawang power plant is the reason behind sharp increase in domestic coal consumption. The Celukan Bawang power plant for instance has capacities of 426 MW while Cilacap power plant has 660 MW capacities. These are two big size power plants that need big amount of coal. Responding to promising domestic market, coal miners like Coal Investors company has been increasing the production. This seems to be the right decision to do and it’s proven by increased number of investors that want to take a piece of this golden opportunity in coal mining.
Apparently, Indonesia government has been pushing more smelters constructions to help developing downstream mining industry. And yes, the smelters construction demand for domestic coal production. And in the next 10 years until 2025, the coal-fueled power plants will still represent 50.3% electricity generation in Indonesia. With this near future projection, coal mining has and will still be considered a potential mining sector that you should be a part of it.