Chinese demand for RI coal increases despite pollution fears: Report

Agritrade Resources Limited, a coal miner in Indonesia with mainland China as one of its top markets, aims to raise output and sales by 30 percent despite slowing Chinese consumption because of rising demand for less polluting coal.

Ng Xin-wei, the chief executive of the Hong Kong-listed company, was quoted as saying by the South China Morning Post that it planned to mine and sell 4.5 million to 5 million tons of coal during this financial year to March, up from 3.8 million tons and 2.8 million tons in the past two financial years.

"Indonesia is close to both India and China, and its coal production cost is among the lowest in the world as 99 percent of its output is from surface mining," Ng told the paper. "It is cheaper to import seaborne coal into south China than from north China via railways."

Most of the coal powers the national grid. The mainland's electricity output growth slowed to 4.7 percent in 2012, 7.6 percent last year and 5.7 per cent in this year's first five months, from 12 to 13 percent in 2010 and 2011. This in turn saw lower coal demand as some 75 percent of the nation's power is generated by coal, the paper said.

But the mainland imported 57.6 million tons of brown coal - with a relatively low heating value - from Indonesia last year, up from 50 million tons in 2012 and 35.7 million tons in 2011. Despite the lower heating value, most of the coal imported from Indonesia is blended with domestic coal to reduce pollutants.

Agritrade is controlled by companies owned by the Ng family's Agritrade International and Singaporean businessman Rashid Maidin's WSJ International Group. Both companies are commodities trading and logistics firms.

Beijing last year considered limiting the import of coal with low-heating values to stem surging imports and support domestic miners suffering from sharp falls in profits and coal prices. (*)