Sunday, March 14, 2010

Indonesia urged to map coal reserves

Bob Kamandanu, chairman of the Indonesian Coal Producers Association (APBI) is urging the Indonesian government to create a precise map of the country's coal reserves and to develop a plan to enable Indonesia to meet its growing demand for power while continuing to be a major coal exporter.

"Currently, our coal consumption is about 40-50 Mt/y. I think peak consumption will likely be around 150 Mt. I see peak production at about 300-325 Mt/y maybe up to 350 Mt/y. That means we could live with our coal for at least 50 to 70 years. We don’t have a clear map of the country’s coal reserves. It would be great if the government could provide comprehensive data regarding the coal reserves and mineable coal. Where is the coal? What’s the quality? If we have the map then we can measure when can we increase our electrification rate, how much coal we need what the calorie rate is," he told Janeman Latul of The Jakarta Globe.

He said a second priority was to encourage the the government not to limit the volume of coal production. "It’s great that the government has launched the domestic market obligation but the pricing must be done according to an international index price. If the government sets its own price then nobody wants to sell their coal to the country’s power generators. The payment by local players is also a problem because the coal producers only get paid about 60 to 90 days after they deliver the coal," he said.

He described coal exports to China and India as good for Indonesia "because 60% of every dollar from coal sold outside the country goes to the government ... India is aggressive, while China is becoming more selective. China is sucking up all the mineral resources it can in order to maintain its economic growth. India really needs our coal because it needs to chase China’s economic growth. So, India’s appetite is actually bigger than China’s. India has many new power plants it expects to come onstream in the next several years and it needs a huge amount of coal. I just recently met several Indian buyers and they are keen to take everything we have," he said.

He noted, however that leagl uncertainties and many regulatory and social problems remained for foreiogn investors. "Many investors are still coming to Indonesia. They want to collaborate with local players because if they are doing it by themselves they will be manipulated ... they will find it hard to find a big coal concession because it has already been taken by Indonesia’s big players. Can they find any other big concession now? I don’t think so."

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