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Coal business shines amid high oil prices February 28, 2006

Posted by ekon in investasi.
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The Jakarta Post, Singapore – 2006-02-27 17:51:57

February 27, 2006

Conveniently forget, at least for a while, that coal is bad for the environment, and instead concentrate on the good news. As high oil prices look set to stay, the Indonesian coal industry is now booming. In the last few years, global demand for coal has been growing by five percent per year.

The average coal price was more than US$65 per ton last year, compared to $54 in 2004, $32 in 2003 and $25 in 1999. Judging from the figures, it is difficult to deny that rising prices have contribute to increased interest in ownership of Adaro.

According to Bloomberg, Indonesia was the fourth largest coal producer in Asia-Pacific after China, Australia, and India in 2003. And very soon Indonesia may overtake Australia.

Meanwhile, the Indonesian Coal Mining Association recorded the country’s total coal production at 127.4 million metric tons in 2004, including 8.7 million metric tons produced by five state-owned coal miners, and 113.4 million metric tons by private contractors. The rest is produced by 6 mining firms that have been granted licenses by local authorities.

With production of 24.3 million tons in 2004, Adaro is now the biggest privately owned coal miner in Indonesia. It is followed by PT Kaltim Prima Coal (21.2 million tons), PT Kideco Jaya Agung (16.9 million tons), PT Arutmin Indonesia (15 million tons) and PT Berau Coral (9.1 million tons). State-owned Bukit Asam, in Tanjung Enim, produced 8.6 millions tons of coal in the same year.

Major markets are China, Japan, Taiwan, India and South Korea. But demand in the domestic market is also expanding, especially from power stations, with at least 15 millions tons of coal being needed to fire these annually.

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