Key Takeaways: 17th Coaltrans Conference - AAA

We attended all 3 days sessions of 17th Annual Coaltrans Conference in Bali with around 2000 delegates from all over the world. The main takeaways from the conference are as follows:

Indonesian Thermal Coal Resources and Reserves
According to Indonesian Coal mining Association in 2010:
· total coal resources: 104.9 bn tonnes (Sumatra 52.4bn, Kalimantan 52.9bn),
· total coal reserves: 21.1bn tonnes (Sumatra 11.5bn, Kalimantan 7.2bn).

The composition of resource coal quality is approximately:
· 25% are low rank coal 3,000 – 4,000 CV,
· 59% are medium range coal 5,000 – 5,600 CV, and
· 15% are high quality rank coal with range of 5,800 – 6,300 CV.

In term of reserves, Indonesia is on the 8th position. USA has the biggest coal reserves with 246 bn tonnes, followed by Russia (147 bn tonnes), China (115 bn tonnes), and Australia (76 bn tonnes)

Indonesian Coal Exports and Its Role in Global Market
Indonesia with its vast coal recources will surely benefit from high demand for coal. In 2011, Indonesian coal production is expected to increase by 14.8% to 340 mn tonnes, and export will increase by 15.2% to 285 mn tonnes. China, India, Japan, South Korea, and Taiwan are the main destinations of Indonesia’s exports. According to Rudi Vann, Lead Analyst from Mackenzie, Indonesia and Australia have an important role in fullfiling Chinese coal demand, because the combined level of coal productions and exports of both countries will likely to be sufficient to meet Chinese domestic demand up to 2015. He also added that, “the two of the top five companies for thermal coal exports are Indonesian (Bumi and Adaro) and by 2015 this will be two of the top three. Six of the top ten largest exporters will come from Indonesian mines”. The coal industry in Indonesia is expected to generate over US$7 billion in government tax revenue this year. Furthermore, Indonesia is geographically well located to supply the Chinese coal market.

Indonesia’s Regulatory Climate: Moderately Supportive
Forestry Moratorium is the latest regulation that had been passed by the government. Under this law, all level of government must cease issuing forest utilization licenses for primary forests (Hutan Lindung) and peatlands. This regulation was the result of the g-to-g agreement between Indonesia and Norway, who already pledged to provide US$1 bn to Indonesia to reduce deforestation and forest degradation for the next two years. This regulation has little impact for Indonesian coal producers though.

New Technologies in Coal Industries
Coldry Technology is the latest technology that is capable of removing water from lignite and sub–bituminous coal, without incurring negative environmental impact. It also improves the level of energy in the black coal. The cost of this technology in reducing e.g. 60% moisture to 12% moisture content is around US$11.50 per tonne. Another Japanese engineering company, JGC, introduced the technology in coal processing that transforms low rank coal to heavy crude oil. All these technologies will prolonge the life cycle of coal, by making it useful for longer period of time.