Kideco says no plan to increase production capacity

Despite commonly shared bullish market perception, East Kalimantan coalminer PT.Kideco Jaya Agung said it had decided not to expand its production capacity, for fear that the trend may reverse by the end of next year.

?Currently Kideco has production capacity of 18 million tons per annum and this will stay for the next two or three years. Kideco could have easily expand production capacity to 23-24 MTPA, but we are not doing so, because once we do, we will have to keep producing at that level,? said managing director Kim Sung Kook.

Kim said that the current bullish coal market might end as early as late next year. He expressed concern that Indonesian coal producers are pumping more and more coal to the market, potentially causing supply glut.

Indonesian coal producers, led by coalmining house Bumi Resources are planning to produce 140 million tons of coal this year, or 15 million tons higher than last year?s production.

Kim said market would not be able to absorb the addition, as other producers such as Australia would also increase output. ?Eventually China would also resume its export as its economic growth is predicted to slow down,? he said. "That would bring the bullish market down."

Kideco itself is planning to increase this year?s production by 10 percent to 16 million tons.

Kim said Kideco is now focusing to increase quality of service to its customers. ?Most of our customers are long term buyers, therefore we will now trying to improve quality of service. For example, any certain buyer wants additional tonnage, we would be able to meet then requirement, because we still have spare capacity that are dedicated to existing customers,? he said. (alex)