Indonesia, the world's largest thermal coal exporter, expects production of low-quality coal to surge in coming years, though technology constraints on turning it into high-grade fuel may limit sales, the Indonesian Coal Mining Association said on Friday.
Limited supply of high-quality coal reserves has forced miners to tap low-quality coal to feed growing demand, particularly from Asian giants China and India,, which have driven up prices Indonesia's low quality coal, which makes up nearly 65 percent of total resources in the world's top thermal coal exporter, had been seen as uneconomical to extract and an unviable fuel source because of its high moisture content and low heating value.
Indonesia's mineable reserves of low-quality coal may reach 10 billion tonnes or half of current total reserves of 21 million tonnes, within the next 2-3 years, as more firms are expected to start producing coal with a low heating value of 3,000-3,400 kcal/kg, association chairman Bob Kamandanu said.
"Bituminous coal reserves are depleting while exploration is not being done properly and comprehensively to discover better resources," Kamandanu told Reuters on the sidelines of the Indonesia Mining Conference in Bali. Lignite or brown coal with a heating value below 5,100 kcal/kg now makes up about 29 percent or 6.1 billion tonnes of the country's total reserves, while high-quality coal of value above 6,100 kcal/kg accounts for only about 11 percent. Kamandanu did not give details of how much production will grow to, but data shows there are now 16 firms that produce coal with a heating value below 4,000 kcal/kg, with combined production estimated at 7.5 million tonnes.
TECHNOLOGY CHALLENGE Low-quality coal is estimated to account for 25 to 30 percent of Indonesia's total coal production by 2015, up from just 10 percent in 2009, said Somyot Ruchirawat, president director of miner PT Indo Tambangraya Megah. "Low-rank coal companies will become significant producers in the long-term," Ruchirawat told the conference.