Indonesia Controlling Coal Exports as Indian Industries Secure Mines

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Researched by Industrial Info Resources (Sugar Land, Texas)--Despite the fact that Indonesia's government will maintain an export ceiling on coal exports as it looks at domestic coal consumption exceeding exports between 2015 and 2020, foreign resource- hungry investors are continuing to target the country's "black gold" seams.

India's Reliance Power (Bombay) has secured 100% ownership of three coal mines with total reserves of 2 billion tons of coal. With a condition on the deal that Reliance will pay in step with the volume of production from the mines, the company still expects to invest $1 billion in developing the mines and setting up export logistics over the next 10 years.

Under an agreement with the three mine owners, the company is allowed to mine up to 40 million tons per annum (TPA) of coal from the mines to supply its 4,200-megawatt (MW) ultra-mega power project (UMPP) at Krishnapatnam in Andrha Pradesh, and the Shahapur power project in Maharashtra.

Reliance intends to invest $600 million in the mines and transport infrastructure to develop the production capacity of the mines to more than 25 million TPA of coal.

The Binani Group (Bombay) is reported to be in advanced talks with Indonesia's largest coal producer, PT Berau, in a bid to acquire a coal mine with a $100 million bid. Binani requires the coal feed for its cement production plants and is part of the Indian cement industry, which consumes 25 million TPA of coal. PT Berau is a joint venture between Dan Rognar Holding (Netherlands) and Sojitz Corporation (Japan) and has mines in Indonesia with an annual output of 40 million tons.

The Indonesian Coal Mining Association (CAO) estimates that annual domestic coal demand will reach 75 million tons in 2009 from the current 52 million tons. Between 2015 and 2020 domestic demand could reach 170 million TPA with exports capped at 150 million TPA. The CAO anticipates the opening of new coal-fired power plants from 2010 onwards. The industry is also expected to switch to coal for energy as global oil prices soar. Coal exports for 2008 are expected to represent 75% of Indonesia's 225 million-ton production, up 4% from 2007's total of 215 million tons.

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