Indonesia Targets Rise in Coal Production

Indonesia’s largest natural resource firm PT Bumi Resources Tbk and other coal producers are increasing production. Japanese trading house Itochu Corp. is considering building a railway exclusively to transport coal on Kalimantan, the Indonesian part of the island of Borneo, jointly with the Indonesian government to support the increasing output. According to The Nikkei, the country’s coal production is expected to grow 10% this year from last year to 212 million metric tons (mt), making Indonesia the second-largest exporter in the world after Australia. According to Bumi Resources, its affiliate PT Kaltim Prima Coal, the country’s largest coal producer, plans to boost production 2% this year over last year to 36 million mt at a mine located in eastern Kalimantan. Five Bumi Resources group companies produced a combined 54 million mt of coal in 2006, equivalent to 9% of the global market, and their output is expected to top 10% this year. PT Adaro Indonesia is targeting 36 million tons in 2007, up 5% from last year.

Itochu has begun a feasibility study on a coal transportation railroad, jointly with the Central Kalimantan provincial government. Currently, coal mined in the interior of Kalimantan is trucked and then shipped by boat, making transportation costly. The total investment is expected to be around $300 million. Itochu targets starting operations in 2013.

PT Kaltim Prima Coal, Indonesia’s largest coal producer, plans to boost production 2% this year.