Indonesian miners see higher coal output in 2012 on China, India demand

Indonesian producers are set to ramping up production next year on strong demand from key buyers China and India as well as an expected recovery of Japanese demand but backlog in heavy equipments may limit expansion plans, producers said on Tuesday.

China?s coal import demand to be steady this year at around 90 million tons from last year while India may import around 67 million tons of coal this year to fuel its massive power plants, more than 15 percent increase from the previous year, Noble Group forecast on Monday.

PT Berau Coal Energy plans to produce 23 million tons in 2012, up from 20 million tones with about 45 percent of the production are shipped to China and India market, said Eko B.F Natalina, the firm?s General Manager Marketing & Sales.

?China and India will lead demand in the future.China was quiet in the first quarter of this year but they are coming back and I believe next year they will consume coal significantly,? Eko told participants in Coaltrans Asia conference in Bali.

PT Adaro Indonesia expects to produce close to 50 million tons of coal in 2012, up from 46 million to 48 million tons for this year, while PT Indo Tambangraya Megah ? a unit of Thai miner Banpu limited?expects production will grow by 10 percent in 2012, from an estimed 25 million tonnes this year, companies? officials said.

Demand from Japan utilities which has been affected by the devastating earthquake and tsunami in March is expected to gradually recover next year.

?They (Japanese buyers) are coming back to the market starting in June. We believe, some will be back in the first quarter of 2012. It will be just in time for the annual price negotiation,? said Eko.

Electric Power Development or J-Power revised down forecast for Japan?s coal demand for this year by 8.3 percent to 110 million tons, from an initial estimate of 120 million tones as some coal-fired power plants remained out of operation, said Masato Uchiyama, the firm?s director of energy business at Coaltrans Asia on Tuesday.

HEAVY-EQUIPMENTS BACKLOG

Despite robust production outlook, mine expansion may be constrained by backlog in heavy equipments order as the devastating tsunami and earthquakes have also affected Japanese construction machinery makers such as Hitachi Construction Machinery and Komatsu Ltd, company officials said.

?Some miners face delay in getting their heavy-equipments up to 12 months. The impact will be greater to miners who order new equipments for expansion of new mines but it?s not so much for firms who have existing equipments,? said Michael Soerijadji, Vice President of Marketing at PT Adimitra Baratama Nusantara.

But coal production from Indonesia--the world's top thermal coal exporter--remains bullish in a long-term, fueled by growing production from two leading producers ? Bumi Resources and PT Adaro Energy.

?Indonesia will be leading coal supply growth, accounting for 39 percent of total export supply growth between now and 2020, said Rudi Vann, Wood Mackenzie?s lead analyst for SE and NE Asia Coal Supply Research.(fitri/denny)