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INTERVIEW-Indonesia Coal Output Seen Up 10 Pct/Yr, Papua Key
* Sees 10 percent annual rise over next five years
* Sees huge coal potential in Papua in longer term
By Michael Taylor
NUSA DUA, Indonesia, May 30 (Reuters) - Coal output in Indonesia, the
world's top exporter of thermal coal, will rise by at least 10 percent
annually over the next five years, with Papua seen tapping into its
huge coal reserves longer-term, producer Bhakti Energi Persada said on
Monday.
Indonesia is forecast to produce around 340 million tonnes of coal
this year -- mainly lower grade coal, used predominantly in developing
countries like China and India.
"Not less than 10 percent," Bhakti's president director Jeffrey
Mulyono told Reuters when asked about Indonesia's annual production
growth over the next five years.
"In terms of demand, the most interesting and growing countries will
be India and China, with India number one importer," he said
Earlier on Monday, the Indonesian Coal Mining Association said India
will surpass Japan as the leading buyer of Indonesian coal this year,
taking as much as 60 million tonnes to help meet its burgeoning power
demand. [ID:nL3E7G41O8]
"India has no alternative for their energy resources," he added.
"China is different -- China is growing well in demand but they still
have alternatives for fulfilling (coal) combinations with their own
development."
Although Indonesia's coal is largely sub-bituminous material with a
lower heating value compared with standard Australian grades, Chinese
and Indian utilities have been snapping up more and more of its
exports to help feed booming domestic demand.
Both India and China have launched aggressive and ambitious plans to
ramp up power supplies in the coming years, with electricity demand in
the former expected to rise 56 percent to 1,400 billion kilowatt hours
by the fiscal year ending March 2017. [ID:nDEB000144] [ID:nL3E7FL1C2]
Mulyono, whose company is one of Indonesia's largest producers of
brown coal, was speaking on the sidelines of the Coaltrans Asia
conference.
Bhakti Energi Persada, a holding company of several mining companies
located in East Kalimantan, has reserves of over 5 billion tonnes.
[ID:nL3E6N20E6]
Mulyono sees huge coal potential in Papua, the easternmost province
seen by many commodity firms as the next hot spot for agriculture and
minerals development in Indonesia, though the area lacks roads and
telecommunications.
"The only problem going there is (that) it is much more troublesome
compared with Kalimantan," Mulyono said.
"They have more malaria, the transportation is expensive, there is no
infrastructure," said Mulyono, who was previously chairman of the
Indonesian Coal Mining Association and Indonesian Mining Association.
"One day I tried to make a plan to view and investigate some areas --
it cost more than 200 million Indonesian rupiah ($23,364) for sending
four people."
Delegates at the conference are also discussing uncertainty
surrounding Indonesia's freshly signed two-year moratorium on new
permits to clear primary forests. [ID:nL4E7GJ1TV]
The moratorium ordered a freeze on new permits to log or convert
primary forests and peatlands -- worrying palm oil, timber and mining
firms in Southeast Asia's biggest economy -- but not going far enough
for environmentalists.
"I don't see it as a problem," said Mulyono, who has more than 30
years experience in the mining and related business industry, focusing
on coal mining in the last 14 years. ($1 = 8560.000 rupiahs)
(Editing by Himani Sarkar)
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INTERVIEW-Bayan Aims To Double Coal Output By 2013
* Bayan eyes 25 mln T coal output by 2013 vs 11.9 mln in 2010
* To focus on India for more long-term customers
* Impact of Japan quake on Bayan shipments limited
By Michael Taylor
NUSA DUA, Indonesia, May 30 (Reuters) - Indonesian coal miner Bayan
Resources Tbk is aiming to more than double its output to as much as
25 million tonnes by 2013 to meet rising demand from consumers such as
India, the firm's chief financial officer said on Monday.
The company, which produced 11.9 million tonnes of coal last year and
expects output to rise to between 14.5 million and 15.5 million tonnes
in 2011, is currently carrying out expansion plans at its mines,
Alastair McLeod told Reuters at the Coaltrans Asia conference.
"We started two new mines in 2008 and two new mines in 2009, therefore
they have a ramp-up profile over four or five years before they get up
to their capacity," McLeod said. "We'll be continually ramping up --
our target by 2013 is to get to 20-25 million tonnes."
In late April, Bayan said it expected to produce 13 million to 15
million tonnes of coal this year. [ID:nJKF002562]
Bayan, Indonesia's eighth-largest coal producer, is 20 percent-owned
by Korea Electric Power Corp and has open-pit mines located in East
Kalimantan.
The firm exports most of its coal to countries and regions that
include Europe, Taiwan, Malaysia, Japan and South Korea.
India, Asia's third-largest economy, is the biggest market for Bayan
by volume, accounting for about 30 percent of all exports, McLeod
said.
"In India currently we don't have any long-term contracts, so mostly
selling on an annual basis," he said. "To other countries, we have got
long-term contracts.
"We tend to like long-term contracts -- three years plus," he added.
"Certain markets don't accept three years, like the Japanese, who do a
one-yearly but it pretty much rolls over."
Electricity demand in India, Asia's third-largest economy, is expected
to rise 56 percent to 1,400 billion kwh by the fiscal year ending in
March 2017. [ID:nDEB000144] [ID:nL3E7FL1C2]
"India is expanding," said McLeod, adding that the 30 percent figure
was little changed since last year and was unlikely to change until
after 2013 when more Indian power plants come on-line.
"We look at India as a base for more long-term customers... China is
definitely on everyone's radar but it's not our main focus," he added.
Despite a bullish long-term outlook Asian coal prices have been
depressed in recent months, largely due to the aftermath of the
Japanese quake and tsunami in March that knocked out some coal-fired
plants.
The index for Australian coal on the globalCOAL index closed at
$119.47 a tonne on Friday, down from more than $140 in January when
prices were driven up by flooding and wet weather in Australia's
eastern Queensland state.
Shares of Bayan Resources rose 0.29 by 0647 GMT, outperforming the
0.13 percent drop in the main Jakarta index.
JAPAN SHIPMENTS OK
Bayan sends 10-15 percent of its exports to Japan, which suffered an
energy crisis after a massive earthquake and tsunami on March 11.
McLeod said the impact of the quake on Bayan was limited.
"It just (so) happened, we had been pushing for all of our remaining
shipments on a Japanese fiscal year to be delivered in the first
quarter," he said. "Apart from two ships, we achieved that."
More of a dilemma for Indonesian coal producers, however, is
uncertainty surrounding the freshly inked two-year moratorium on new
permits to clear primary forests. [ID:nL4E7GJ1TV]
The moratorium ordered a freeze on new permits to log or convert
primary forests and peatlands -- worrying palm oil, timber and mining
firms in Southeast Asia's biggest economy -- but not going far enough
for environmentalists.
"Our understanding is, for mines already in existence -- and the
ministry is compiling that list at the moment -- you will be able to
get renewals of your license," said McLeod. "If you get on the list
now, if your renewal comes in the moratorium time, you'll be able to
renew, but for new players, you won't.
"We're very happy that they have taken account of an existing operation."
Another challenge for Indonesia, the world's top exporter of thermal
coal, is poor infrastructure -- which analysts say is one of the
factors restricting economic growth.
Coal producers in the archipelago of 17,000 islands, have to grapple
with power shortages, a lack of roads and ageing ports.
Investment is slowly happening though, with Reliance ADA Group, a
leading Indian conglomerate, the latest to announce a multi-billion
dollar infrastructure investment. [ID:nL4E7GI19L]
"We don't use public roads, apart from to get to our mines," said
McLeod. "You can't rely on public transportation -- there isn't any
and you have to build your own."
Indonesia, which is expected to produce about 340 million tonnes of
coal this year, produces mainly lower grade coal, used predominantly
in emerging markets.
"You've got an awful lot of the mines that have developed close to the
coasts," McLeod said. "If the Indonesian government wants to further
expand the coal business, it really needs to start looking further
in-land.
"You are most likely looking at rail transportation for that far a
distance, and certainty over land purchase would be an intricate part
of that."
(Editing by Ramthan Hussain)