INDONESIAN COAL MINING OUTLOOK Presented at the IEA workshop COAL MARKET S OUTLOOK, 14 April 2011 ORIENTAL BAY INTERNATIONAL HOTEL, BEIJING, P.R. CHINA BY : BOB KAMANDANU CHAIRMAN OF INDONESIAN COAL MINING ASSOCIATION (ICMA) 1 INDONESIAN COAL MAP RESOURCES AND RESERVES 52.53 b.t 51.92 b.t 9.90 b.t SUMATRA 11.23 b.t 0.23 b.t 0.002 b.t 0.15 b.t Resources : 104,842 b. t Lignite : 20 % Subituminous : 66 % Bituminous : 14 % 0.01 b.t b.t : billion tons Reserves : 21,13 b. t Lignite : 29 % Subituminous : 60 % Bituminous : 11 % Source: Source: BadanGeology/Geological Geological Agency, 2010, Agency,2009 and other sources 2 1
DISTRIBUTION OF INDONESIAN COAL RESOURCES REPORTED IN 2007 SUMATRA 8% KALIMANTAN 1 % 32% SULAWESI MALUKU PAPUA 48% 10% JAVA BALI Distribution of Coal Resources Potential Source : Indonesian Coal Book,2008/2009, ICMA, July 2008 3 INDONESIAN COAL RESOURCE STATUS - 2009 By Calorific Value ( adb ) 70,000.00 60,000.00 50,000.00 69,550.65 M ton ( 66.39 % ) Low < 5100 Medium ( 5100-6100 ) High ( 6100-7100 ) Very high > 7100 40,000.00 30,000.00 20,000.00 10,000.00 21,183.05 M ton ( 20.22 % ) 13,021.50 M ton ( 12.43 % ) 1,001.64 M ton ( 0.96 % ) 0.00 Low < 5100 Medium ( 5100-6100 ) High ( 6100-7100 ) Very high > 7100 Source : Indonesian Geological Agency 2
PRODUCTION, EXPORT AND DOMESTIC SALES AND FUTURE FORECASTS 5 INDONESIA S THERMAL COAL PRODUCTION, EXPORT AND DOMESTIC SALES Coal production increased by 14.8 %,from 283 million tons in 2009 to be around 325 million tons by 2010, and in 2011 is predicted to be around 335 to 350 million tons. Export increased by 15.22 %, i.e. from 230 million tons to be around 265 million tons by 2010; and in 2011 is predicted to be around 270 to 285 million tons. Domestic sales increased about 13.21 %, i.e. from 53 million ton to be around 60 million tons by 2010. In 2011 the domestic sales is predicted to be around 63 to 69 million tons. China, India, Japan, South Korea, and Taiwan are the main countries of destination of Indonesian coal export. Almost 72 % of the coal production are exported, while the rest are sold domestically; 6 3
Thousand tons Milion tons INDONESIAN COAL PRODUCTION, EXPORT AND DOMESTIC SALES (1996-2010) 350 300 250 Production Growth : 14,8 % per year Export Growth : 15,12 % per year Domestic Sales Growth : 13.8%per year LRC Production in 2009 was about 5,8 % of the total production, and increased to about 8,7 % by 2010 %. 221.1 240 283 230 325 265 200 190.48 191 150 100 50 0 79.3 72.9 62.1 54.1 53.9 57.2 46.2 46.7 40.9 35.5 10.9 13.2 15.4 19 22.1 158.6 152.86 144.94 121.04 130.86 110.79 102.6 90.7 93.76 85.3 73.4 63.4 62.5 60 35.74 37.1 41.3 45.54 49 53 27.3 29.2 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Production Export Domestic INDONESIAN COAL EXPORT BY MAIN DESTINATION COUNTRIES 45,000.00 40,000.00 35,000.00 30,000.00 25,000.00 20,000.00 15,000.00 Japan India Korea, Republic of Taiwan China 10,000.00 5,000.00 0.00 2004 2005 2006 2007 2008 2009 2010* 4
Million tons INDONESIAN COAL EXPORT BY DESTINATION COUNTRIES (Million Tons) Country of Destination 2004 2005 2006 2007 2008 2009 2010* Shares (%) India 10,674.1 16,255.4 20,742.4 25,179.1 26,327.5 39,109.0 43,432.4 16.70 China 1,473.1 2,503.2 6,656.5 14,122.3 15,673.7 38,657.6 42,931.1 16.51 Korea, Republic of 11,669.3 14,376.6 21,314.1 27,371.5 26,286.8 33,418.3 37,112.3 14.27 Japan 22,612.1 27,312.8 35,295.7 35,198.5 36,259.8 32,217.7 35,779.3 13.76 Taiwan 17,765.5 17,895.8 26,723.8 24,863.1 24,669.4 24,723.4 27,456.5 10.56 Malaysia 6,112.8 7,399.8 8,782.6 9,376.5 11,104.3 12,483.3 13,863.3 5.33 Thailand 4,787.2 6,404.5 8,475.1 11,963.2 12,822.8 11,229.5 12,470.9 4.80 Hongkong 7,367.3 9,408.6 10,985.2 11,235.5 10,497.1 10,714,2 11,898.6 4.58 Philippines 3,603.1 3,906.1 5,818.2 6,023.5 6,338.0 7,517.9 8,349.0 3.21 Italy 5,198.1 6,285.5 7,637.8 6,193.8 5,592.8 5,796.9 6,437.7 2.48 Spain 2,775.7 3,317.0 4,444.9 4,308.6 4,387.4 4,808.3 5,339.8 2.05 Netherlands 1,105.7 2,138.7 5,690.9 1,266.9 3,740.7 3,384.8 3,759.0 1.44 United States 1,959.9 2,050.3 3,740.8 4,557.7 3,993.8 2,081.5 2,312.0 0.90 Others 8,526.0 9,789.8 17,701.0 14,125.7 13,327.6 7,976.3 8,858.1 3.41 TOTAL 105,629.9 129,044.1 184,009.0 195,785.9 201,021.7 234,118.7 260,000.0 100.00 Source : Statistical Yearbook of Indonesia, 2009, BPS Statistics of Indonesia Note : * Estimation THE DEVELOPMENT OF COAL PRODUCTION, EXPORT AND DOMESTIC SALES, AND ESTIMATION UP TO 2025 (based on the existing infrastructure capability) 600 Production Export Domestic 560 500 Realization Prediction 400 398 414 300 200 100 0 325 300* 283 250 240 260 240 221.1 230 265 190.48 191 184 144.94 158.6 148 60 45.54 62.5 49 53 2006 2007 2008 2009 2010 2015 2020 2025 Note : *Calculated based on Government target on Primary Energy Mix ( Pres. Decree No.5 /2006 ) 10 5
KEYS TO FUTURE DEVELOPMENT OF INDONESIAN COAL MINING INDUSTRY FACTS: Increasing pressure on conservation of Indonesian coal Numbers of Mining Permits (IUP) issued: 4000 to 5000 permits; companies in operation: 300 to 400 companies Increasing number of small mining companies without Good Mining Practices, Proper CSR Practices, and Good Corporate Governance, hence industry image s deteriorates. Low infrastructure capacity New regulations tend to limit agressive expansion of coal mining activities, and campaigning more local/domestic consumption. There is more Low Rank Coal available than High Quality Coal Indonesia is rich of other mineral as well (Nickel, Iron Ore, Manganese, Bauxite, Aluminium, Copper, Gold, etc,) 11 KEYS TO FUTURE DEVELOPMENT OF INDONESIAN COAL MINING INDUSTRY ADDRESSING THE CHALLENGES: Development must be expanded to be beyond conventional produce and sell of thermal coal. Investing in infrastructure (railways, hauling roads, etc.) Continuing exploration Investing in coal minings with sizeable operations by consolidating small IUPs (permits) to become at least 5,000 ha. Investing in Coal Upgrading (UBC, Lignite to semi-soft coking coal, CWM, etc.), Coal Conversion (CTL, Coal Gasification, etc.) technologies as well as CBF (Coal Blending Facilities) Relocating mineral precessing industries such as Nickel, Manganese, iron ore smelterings, or even further to steel making closer to source of energy (coal and natural gas) by way of mine-mouth power plants (cheaper energy). 12 6
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