Indonesia sees strong coal export growth in 2007

Indonesia is expected to increase coal production by 20 million tonnes to more than 170 million tonnes next year with most of addition would go to surging Indian market, an executive of Indonesia?s top coal exporter said on Monday.

Kaz Tanaka, a senior executive of PT. Bumi Resources Tbk. Which controls Kalimantan-based coal miners PT Kaltim Prima Coal (KPC) and Arutmin Indonesia said that next year, Indonesia would likely increase export to 150 million tones from 125 million tones this year.

?Most of the coal will go to India, where we see additional demand of 10-15 million tones next year,? said Tanaka, who is also deputy chairman of Indonesian Coal Mining Association (ICMA), adding that Indonesia would likely be the main source of India?s incremental import due to location proximity.

The remaining production tonnage, he said, will likely be going to China where demand is likely increasing next year due to high economic growth. China has issued policy to restrain export to due high local demand. As consequence, he said, Indonesia has potential to fill markets that are abandoned by China. ?Japanese buyers have stated intention to buy more coal from Indonesia in 2007,? he said. Bumi sells 14 million tones of coal to Japanese customers in 2006 and is hoping to sell more in 2007, he said. Tanaka said the market that China would leave next year could reach between 20-30 million tonnes

He said that global thermal coal demand will stay strong in 2007 as demand from power companies are predicted to remain strong since the power firms have no intention to reduce their high inventories. ?In 2007, the risk of power companies to reduce imports by cutting down inventories is minimum,? he said, adding that in general, thermal coal price will be relatively higher in 2007.

Tanaka predicted that Indonesian coal would continue to increase until 2010. ?In 2010, Indonesia?s coal production will reach 200 million tones with most of production addition will go to export market.? However, from 2010 on, domestic market will begin to absorb production increase with commencement of new 10,000 MW power plant projects that state electricity firm PLN is currently planning, he said.

Indonesia is the second largest thermal coal exporter after Australia in 2005 and may take over Australia?s position this year or next year. (alex)