coal prices to surge in 2012

Global coal prices may rise more than 5 percent next year as surging demand from China and India making mining companies like Berau Coal, Bumi and Banpu great buying, Shayne Heffernan said.

The price of thermal coal is expected to rise to $130 per metric ton by the end of this year and remain high into 2012.

Thermal coal was at $120.95 per metric ton on the globalCOAL Newcastle index, the benchmark for Asian utilities, at Friday??s close. It reached a high of $140 in January when prices were pushed up by floods in Australia??s eastern Queensland state.

Coal companies will try to take advantage of the high price by producing more coal, Bob said.

Output increased 10 percent to 188 million tons in the first half this year, up from 171 million tons in the same period last year. Most of Indonesia??s coal production is thermal.

Total 2011 coal output is estimated to increase 20 percent to 360 million tons from last year, according to the association, but could go higher if the weather is favorable in the seond half.

China??s demand for coal is seen doubling from 3 to 6 billion tons in the next five years. India??s demand is projected to exceed 1 billion tons by then, up from 600 or 700 million tons this year.

Demand from other nations, including Vietnam, will further drive up the price, Bob said.

State-run PetroVietnam plans to build a power plant that will use coal from Indonesia and Australia, and media reports indicate that Jaks Resources of Malaysia has been licensed to build one in northern Vietnam.

Berau Coal, one of the largest mining companies in Indonesia, projected its output would increase 25 percent from 20 million tons this year to 25 million tons next year.