Ann: Indonesian Opportunities Update , page-2

Strong thermal coal export growth expected from Indonesia

PERTH (miningweekly.com) − Two of the world�s top three thermal coal exporters could be Indonesian companies by 2015, an analyst said on Tuesday.

Wood Mackenzie lead analyst for South East and North East Asia, Rudi Vann said that production and new domestic investments would be the key to Indonesia making up the largest share of thermal coal growth for exports in the next decade.

This production boom would benefit the country�s economy and find opportunities in China, even with one-billion tons of increased Chinese production expected, Vann said.

He predicted that Indonesian firms Bumi Resources and Adaro Energy would be two of the top three thermal coal exporters by 2015, as each owned mines at the top of the ten largest mine expansions for thermal exports in the world.

In all, six of the ten largest mine expansions in the thermal coal market belonged to Indonesia.

�The production increase in mines plus greenfield projects will propel Indonesia to account for the largest share of thermal coal production growth for exports. This will also benefit the local economy with a record high of $7-billion contribution to government revenue this year,� Vann said

Wood Mackenzie forecasted that China would produce an additional one-billion tons of thermal coal by 2015, but added that this would still struggle to keep pace with demand.

Additionally, the domestic production increase was heavily dependant on infrastructure expansions because of the distance between demand centres and the majority of China�s supply growth.

The consultancy warned that any delay in infrastructure projects would widen the supply gap.

�With opportunities for thermal seaborne exports, Indonesia needs to continue to attract new investors to sustain production increase ahead of its largest competitor � Australia.

�In fact, by 2020, 60% of the 133-million tons a year of new production from greenfield projects will be used for export supply. What will best attract investors to Indonesia instead of Australia will be competitive cash costs as well as attractive and stable fiscal terms.�

Vann noted that Indonesia had relatively attractive fiscal terms as compared with Australia, with a lower government take and lesser risk of fiscal instability.

�At the moment, Australia faces higher risks of increased taxes from the potential minerals resource rent tax and carbon tax. This instability could discourage new projects, driving investments towards Indonesia instead.�


Edited by: Creamer Media Reporter




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