India links

The world's second most-populated country was, until recently, believed to contain the world's fourth largest reserves of coal. The vast majority of its coal mines are owned and managed by a single state entity, Coal India Ltd (CIL), the biggest coal mining corporation by volume in the world (PTI, 24/2/1010).

However, TERI (The Energy and Resources Institute, Delhi) estimates that the country has "only 45 years" left of exploitable domestic coal - standing in stark contrast to an earlier estimate of 200 years (WC Asia Special 2010).

In 2009, India imported 45 mt of thermal coal, a significant proportion of which originated in Indonesia.

India generates 70% or more of its electricity by burning coal. (Hydro and "renewables" account for nearly 24% and nuclear power 4% (WC Asia Special 2010, op cit). There's no doubt that considerably more of the raw material will be required from overseas during the next 2-3 years.

However, there are varying projections of what this will mean in terms of coal demand. India's Ministry of Power predicts a 120 mtpa shortfall by the close of 2010, declaring that imports must be increased by 50 mt from next year (2011). Raising the stakes somewhat higher, a recent study by Citigroup estimates that India must purchase 140 mtpa, of both steam and coking coal, from foreign suppliers by 2014 - with 50 mt arriving before next year. The Indian Planning Commission sets a lower, but remarkably precise figure, of 81.03 mt being required from imports during 2011 itself.

At the same time, CIL - perhaps over-optimistically - says it will increase its total supplies (of both coking and non-coking coal) from 689 million tonnes in 2011/2012 to almost double (1,015 mtpa) by 2016, in order to satisfy demand (WC Asia Special ibid).

The Coal Ministry in early 2010 announced it was "encouraging" CIL to acquire or develop coal mining operations in Mozambique, Australia, Indonesia, South Africa and the US (WC 2/2010).

Tata Power (see also next section) has already got its dark tentacles deep into East Kalimantan and Mozambique.

Other major Indian companies hungry for Indonesian coal include GMR, Lanco, NTPC, PTC, Reliance and cement producer Binani (see next section).

Indian steel producers are also actively seeking acquisitions and investment opportunities in overseas metallurgical coal projects "to ensure supply security as well as guard against price volatility" (WC ibid), while Essar Steel already operates Indonesia's largest flat steel plant.

SAIL (The Steel Authority of India), the country's most significant producer of steel and iron ore for domestic use, has been in talks with firms in Australia, Aotearoa/New Zealand, Mozambique - and Indonesia - to this end (WC ibid).

References:
PTI: Press Trust of India
WC: World Coal magazine (monthly)

Foreign companies that have their hands (or eyes) on Indonesia's coal

Anglo Coal (subsidiary of UK-listed Anglo American plc and based in South Africa), is seeking to exploit thermal coal opportunities in Indonesia (Reuters 12/4/2010).

Banpu Public Company Ltd (Thailand), owns 5 mines, containing reserves of around 300 mt, in South and East Kalimantan - Jorong, Indominco Bontang, Kitadin-Emblamut and Trubaindo (Coal Trans 7/5/2010).

BHP Billiton (Australia and the UK) is planning to advance its Maruwai coal project in Central Kalimantan (seven concessions covering 350,000 hectares) along with PT Adaro Energy. Production is targeted to begin in 2014, rising to 5 mtpa of thermal and coking coal during the following five years (see separate item on UK-Indonesia connections).

Binani Cement (India) announced in 2009 it would be "looking" at acquiring coal blocks in Indonesia in order to meet its energy requirements for cement kilns. (Mergers and Acquisitions in India, 19/3/2009).

China Investment Corp (a Chinese state agency) has allocated USD1.9 billion to acquire Indonesian mines, in partnership with PT Bumi Resources (WC Asia Special 2010).

Churchill Mining Plc (UK) signed an MOU this year with a subsidiary of PT Perusahaan Listrik Negara (PLN), Indonesia's state electricity utility (WC Asia Special 2010) to supply PLN-Batubara (PLN's coal subsidiary) with 4 mtpa from its East Kutai Coal Project (EKCP), in addition to 20 mtpa already intended for delivery elsewhere. Churchill is also partnered in a coal-bed methane trial project at Sendara in East Kalimantan, along with Indonesia's Ridlatama Group which owns nearly thirty concessions (KPs) in East Kutai, Pasir and West Kutai blocks - all in East Kalimantan (Ridlatama website, accessed 29/6/2010).

CIL (Coal India Ltd) (India) has short-listed 24 foreign firms as potential partners in sourcing overseas coal, including from Indonesia (WC 4/10).

Essar Steel (India, and UK-registered) owns a flat steel products plant in West Hava and holds 35% domestic market share in Indonesia (Essar corporate website, 22/7/2010). Essar this year announced that it had agreed to buy the Aries coal mines in Indonesia to secure supplies for its power plants (Business Standard 25/3/2010).

GMR Energy (part of India's GMR Group) acquired in 2009 a 100% stake in PT Indonesia's Barasentosa Lestari (PT BSL), which holds two coal blocks in South Sumatra (Business Standard 26/2/2009; see also GMR website). GMR holds 50% of InterGen NV, a global energy producer, which operates 12 power plants, in the UK, the Netherlands, Mexico, the Philippines and Australia.

Kangaroo Resources (Australia) has a number of "coal options" in East Kalimantan (WC Asia Special 2010).

Lanco (India) has been recently seeking opportunities to import coal from Indonesia and elsewhere to feed power projects in coastal regions.

Leighton Group (Australia) wholly-owns Thiess Indonesia, which operates PT Arutmin's mines in South Kalimantan (see below).

MEC (United Arab Emirates) announced plans in 2009 to start operating coal mines in East Kalimantan during 2010 (Reuters 8/12/200).

Noble Group - (Hong Kong), Asia's largest commodities trading firm; owns PT Sangha Coal Indonesia (Noble Group website, accessed 29/7/1010). Sangha's Morris2 mine in East Kalimantan exports coal to Eastern Europe, China and Japan.

North American Coal Corporation (USA, a subsidiary of NACCO Industries) is partnered with Reliance Power (qv) to provide technical services for the Indian corporation's "development" of the Aries mines in South Sumatra.

NTPC (India, state-owned utility) in July 2010, announced plans to import 5-10 million tonnes of coal from Indonesia between now and 2017. (Energy Business News, 15 July 2010).

Peabody Energy (USA) opened an office in Jakarta in 2009, "to expand business development and coal sourcing opportunities to serve the fast-growing Pacific Market" (CoalTrans 1/6/2010).

PTC India (India) has identified Indonesian and Australian sources of coal as "top" of its wish list (WC 4/10).

RAK (Dubai) In February 2008, the Dubai government's Ras Al Khaimah Investment Authority, together with RAK Minerals and Metals Investments (RIMMI) signed an MoU with the provincial government of South Sumatra that "covers the entire mining-to-export chain of the coal industry" (Gulf News 19/2/2008).

Ramky Infrastructure Ltd (India) announced in January 2010 that it was "looking at some coal mines in Indonesia" - without specifying which (Business Standard, 1/1/2010).

Reliance Power (India) signed in June 2010 an agreement with Indonesia's mining and industrial Sugico Group to acquire three coal mines (Bloomberg 10/7/2020). The three mines are in South Sumatra. Their output is earmarked for Reliance's proposed Krishnapatnam Power Project in Andhra Pradesh.

Rognar Holding B.V (Netherlands), together with Japan's Sojitz Corp. (qv) respectively hold equity in PT Berau Coal which operates the Binunan Lati and Sambarata coal mines in East Kalimantan, from which Rognar obtains both thermal and smaller amounts of metallurgical grade coal (Rognar website, 29/7/2010).

Sahin Jain (India) claims as partners the Indonesian companies, PT Kaltim Prima, PT Adaro and PT Bumi, as well as Rio Tinto, Glencore, Noble Energy and Austral Coal. The company supplies thermal coal to Tata and GMR; and metallurgical coal to steel plants.

Samtan Co (South Korea), part of industrial conglomerate, Samchully, imports thermal coal from Indonesia plus metallurgical coal for its steel production. With Jakarta-based Indika Energy, Samtan controls PT Kideco Jaya Agung. Kideco's workforce has suffered several mine fatalities so far this year: two in January, a further two in May, and one in June.

Shenhua Group (China) in July announced a start to construction of a 300 MW power plant in South Sumatra, to be fed by a 1.5 mtepa coal mine (Bloomberg 13/7/2010). This is the first time that a Chinese company has invested directly in Indonesia's own electrical energy production.

Sojitz Corp (Japan) owns 10% of PT Berau Coal (see also Rognar Holding BV)

Straits Asia Resources (Singapore). The Sebuku mine in South Kalimantan and the Jembayan mine in East Kalimantan is operated by its subsidiary, PT Bahari Cakrawala Sebuku.

Tata (Tata Sons) (India). In March 2007, Tata Power concluded a US$1.1 billion agreement with PT Bumi Resources to acquire 30% stakes in PT Kaltim Prima Coal, in PT Arutmin and a Bumi-owned coal trading company. In March 2010, Tata announced a major step-up to its Indonesian coal mining capacity, from the current 60 mtpa to 75 mtpa by the middle of the coming fiscal year (WC 4/2010).

Thiess (of Australia, wholly-owned subsidiary of Leighton Holdings), in 2000 secured one of its largest-ever contracts, with PT Arutmin, to operate the Senakin and Satui Mines in South Kalimantan (www.leighton.com.au/about_us/projects/senakin_and_satui_coal_mines.html)

Vinacomin (Vietnam), in 2009 announced plans to begin importing coal from Indonesia (The US Energy Information Administration's International Energy Outlook, 2009)

The full report can be found on the Mines and Communities website www.minesandcommunities.org/article.php?a=10299

References WC: World Coal magazine (monthly)