Cement producers worrying about coal supplies

Indonesia's cement producers are beginning to worry about coal supply as source of energy and demanded the government to take steps similar to the one taken by China -- if necessary -- to secure the coal supplies, the Kompas newspaper reported in its Tuesday edition.

Under a new policy, China is sharply reducing coal exports.

Director of coal and mineral enterprises at the ministry of energy and mineral resources Mahyudin Lubis told the media on Monday that the cement producers were worried. The officials from the ministry of energy and mineral resources and the ministry of trade and industry will meet very soon to discuss this issue.

But Mahyudin said local companies, actually, should not worry about coal supply because of Indonesia’s huge coal production. For example, country’s 2003 total coal production was 112 million tons and this would likely to increase to 135 tons in 2005.

Moreover, the cement industry needs only 4.7 million tons of coal per year and the biggest coal consumer of coal, coal-fired power plants, just need 20 million tons per year.

“ If you don’t want to worry about coal supplies, it would be better for the companies to sign long-term supply contracts. This was done by companies in several foreign countries,” Mahyudin said.

Meanwhile, PT Semen Gresik Tbk. corporate secretary Soebagyo said his company is not worried about coal supply in the short-term because it has already signed contract with coal supplier. However, there is no guarantee in the long term

In fact, Semen Gresik wants to have a long term contract with coal suppliers, but no body wants to sign it. This lead to uncertainty and the sharp increase in the coal price on the spot market.

“ Coal producers want to sign long-term contract, if the price is relatively high. That’s why coal producers are very happy to sell through short-term contract because they knew the prices were going up,” Soebagyo said.

He said the government must take extreme measures including banning of coal exports to give priority to the domestic consumers.

Separately, Indonesian Coal Mining Association (APBI) executive director Bambang Susanto also said the time has come for the government to make a new policy to secure the coal supplies to domestic companies.(*)