Coal Mining in Indonesia to 2020

Indonesia is a leading global producer and exporter of steam coal, with production estimated at 421 million tons (Mt) in 2013 and projected to reach 503.8Mt in 2020, growing at a compound annual growth rate (CAGR) of 2.5%. Substantial production over the forecast period 2014–2020, will be the result of both capacity expansions and the commencement of new projects. The islands of Kalimantan and Sumatra dominate Indonesia’s coal production and steam coal accounted for all the coal produced in the country, with the largest coal mines being the Sangatta, Paser and Batuah Village mines in East Kalimantan, and the Alam Duta Kalimantan mine in South Kalimantan.

Scope

The report contains an overview of the Indonesian coal mining industry, together with its key growth factors and restraints. It also provides detailed information about production, prices, production by grade, basin and mining methods, reserves, reserves by grade and regions, major producing mines, competitive landscape, major exploration and development projects, consumption, consumption by type and trade. Also included is the country's fiscal regime, which includes governing bodies and relevant laws, rights and obligations of the mining companies, as well as key fiscal terms.

Key Highlights

• Coal deposits are scattered across 11 distinct basins on the four major areas of the archipelago that makes up Indonesia. The deposits are widely distributed across Sumatra, Kalimantan, West Java and Sulawesi.

• The major export markets for Indonesian coal in 2013 were India, China, South Korea and Japan. Steam coal exports are expected to grow over the forecast period with rising demand from India and China.

• A competitive advantage for Indonesian coal miners is its low cost of production compared to the global average. As a result, many coal mining companies in Indonesia are continuing to increase production despite weak coal prices.

• Indonesian coal deposits have low to medium calorific value, with high moisture and low ash content. The main advantage of Indonesian coal is its low sulphur content, which makes it one of the cleanest coals available in the world.

Reasons to buy

Gain an understanding of the Indonesian coal mining industry, the relevant drivers and restraining factors, historical and forecast production, consumption and trade data and the fiscal regime.

Companies mentioned

PT Bumi Resources Tbk

PT Adaro Energy Tbk

Bukit Asam (Persero) Tbk

PT Indo Tambangraya Megah Tbk (ITM)

PT Berau Coal Energy Tbk (Asia Resource Minerals Plc)

PT Kideco Jaya Agung

Table of Contents

1 Executive Summary 1

2 Coal Mining in Indonesia 5

2.1 Country Overview 5

2.2 Mining Overview 5

2.3 Coal Mining in Indonesia – Drivers 6

2.3.1 Infrastructure Facilities 6

2.3.2 Expansion of Domestic End-Use Markets 6

2.3.3 Lower Cost Production 7

2.3.4 Upcoming Projects in the Medium Term 7

2.4 Coal Mining in Indonesia – Restraints 8

2.4.1 Royalty Increase for Coal Exports 8

2.4.2 Restriction on Exporting Ports 8

2.4.3 Falling Steam Coal Prices 8

2.4.4 Low-Quality Coal 8

2.4.5 Adverse Rainfall 9

3 Coal Mining in Indonesia – Production, Consumption, Reserves and Trade 10

3.1 Reserves by Grade and Geographical Location 10

3.2 Historical and Forecast Production 11

3.2.1 Total Production by Grade 12

3.3 Total Production by Region/State/Basin 13

3.4 Coal Prices 13

3.5 Competitive Landscape 14

3.5.1 PT Bumi Resources Tbk 15

3.5.2 PT Adaro Energy Tbk 16

3.5.3 PT Bukit Asam (Persero) Tbk 17

3.5.4 PT Indo Tambangraya Megah Tbk (ITM) 18

3.5.5 PT Berau Coal Energy Tbk (Asia Resource Minerals plc) 20

3.5.6 PT Kideco Jaya Agung 20

3.6 Total Production by Major Mines 21

3.7 Total Production by Mining Method 22

3.8 Major Exploration and Development Projects 22

3.9 Coal Consumption and Trade 24

3.9.1 Total Consumption by Type – non-coking 24

3.9.2 Domestic Consumption vs. Exports 26

3.9.3 Export to Destination Countries 28

3.9.4 Exports by Type – Steam Coal 30

3.9.5 Exports by Type – Coking Coal 31

3.9.6 Imports by Source and Type/Grade 33

3.10 Demand Drivers 33

3.10.1 Demand vs. Final Uses 33

4 Fiscal Regime 36

4.1 Indonesia, Governing Bodies 36

4.1.1 Ministry of Energy & Mineral Resources (MEMR) 36

4.1.2 Directorate General of Mineral and Coal 36

4.2 Indonesia, Governing laws 36

4.2.1 The Mining Law – Mineral and Coal Mining 36

4.2.2 Domestic Market Obligation (DMO) 36

4.3 Indonesia, Mining Licenses 37

4.3.1 Mining Efforts License 37

4.3.2 Special Mining Business License (IUPK) 37

4.3.3 Contract of Work (CoW) or Coal Contract of Work (CCOW) 37

4.4 Indonesia, Rights and Obligations 38

4.4.1 Rights 38

4.4.2 Obligations 38

4.5 Indonesia, Fiscal Terms 38

4.5.1 Royalty 38

4.5.2 IUPK Production Tax 38

4.5.3 Corporate Income Tax 39

4.5.4 Capital Gains 39

4.5.5 Real Property Tax 39

4.5.6 Withholding Tax 39

4.5.7 Loss Carry Forward 39

4.5.8 Branch Profit Tax 39

4.5.9 Depreciation 39

4.5.10 Value Added Tax (VAT) 40

5 Appendix 41

5.1 What is This Report About? 41

5.2 Methodology 41

5.3 Secondary Research 41

5.4 Primary Research 41

5.5 Contact GlobalData 42

5.6 About GlobalData 42

5.7 GlobalData’s Services 42

5.8 Disclaimer 44

List of Tables

Table 1: Typical Proximate Analysis of Various Coals 10

Table 2: Coal Mining in Indonesia, Total Production – Steam and Anthracite (million tons), 2000–2020 13

Table 3: Typical Proximate Analysis of Various Indonesian Coal Brands, December 2013 14

Table 4: Coal Mining in Indonesia, PT Bumi Resources Tbk, Major Projects 16

Table 5: Coal Mining in Indonesia, PT Adaro Energy Tbk, Major Projects 17

Table 6: Coal Mining in Indonesia, PT Bukit Asam (Persero) Tbk, Major Projects 18

Table 7: Coal Mining in Indonesia, PT Indo Tambangraya Megah Tbk, Major Projects 19

Table 8: Coal Mining in Indonesia, PT Berau Coal Energy Tbk*, Major Projects 20

Table 9: Coal Mining in Indonesia, PT Kideco Jaya Agung (Kideco), Major Projects 21

Table 10: Coal Mining in Indonesia, Major Active Mines 21

Table 11: Coal Mining in Indonesia, Major Exploration Projects 23

Table 12: Coal Mining in Indonesia, Major Development Projects 24

Table 13: Coal Mining in Indonesia, Total Consumption by Type – Steam and Coking Coal (million tons), 2000–2020 26

Table 14: Coal Mining in Indonesia, Consumption vs. Exports (million tons) 2000–2020 28

Table 15: Coal Mining in Indonesia, Export to Region and Destination Countries (million tons), 2013 30

Table 16: Coal Mining in Indonesia, Steam and Coking Coal Exports (million tons), 2000–2020 32

Table 17: Coal Mining in Indonesia, Depreciation Tax Rates (%), 2013 40

List of Figures

Figure 1: Estimated Electricity Consumption in Indonesia, 2010–2030 7

Figure 2: Rainfall at the Tutupan Mining Area in 2012 9

Figure 3: Coal Mining in Indonesia – Distribution of Coal, 2013 11

Figure 4: Coal Mining in Indonesia, Total Production – Steam Coal (million tons), 2000–2020 12

Figure 5: Indonesia Coal Price Reference, 2013 14

Figure 6: Coal Mining in Indonesia, Total Consumption by Type – Steam Coal (million tons), 2000–2020 25

Figure 7: Coal Mining in Indonesia, Domestic Consumption vs Exports (million tons) 2000–2020 27

Figure 8: Coal Mining in Indonesia, Export to Destination Countries# (%), 2013 29

Figure 9: Coal Mining in Indonesia, Exports by Type, Steam Coal (million tons), 2000–2020 31

Figure 10: Coal Mining in Indonesia, Exports by Type, Coking Coal (million tons), 2000–2020 32

Figure 11: Chinese Coal Imports (Tons), 2007–2012 34

Figure 12: Indian Coal Imports (Tons), 2007–2012, 35

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