Government to limit coal exports until 2025: Official

The Jakarta Post, Jakarta

The government's policy of limiting coal exports to about 150 million tons a year will last until 2025 in order to meet the surging demand from domestic buyers, a senior official at the Energy and Mineral Resources Ministry says.

Simon Sembiring, the director general of mineral, coal and geothermal energy, said Tuesday in Jakarta that the policy had been adopted to ensure sufficient supplies on the domestic market.

"Domestic demand will raise significantly when dozens of coal-fired power plants begin operation in 2010," he was quoted as saying by Antara.

He said that in 2010, the country's coal production would amount to about 240 million tons a year, of which some 90 million tons would be sold to domestic buyers, with the remaining 150 million tons being available for export.

He said that while it was expected that annual coal production would increase to 380 million tons by 2025, exports would still be limited to 150 million tons as the other 220 million tons would be allocated to the domestic market to meet demand from industrial users.

"The export cap could be lower than 150 million tons if the demand from local users is higher than the initial projection," Simon added.

In 2008, the country's total coal production is expected to reach 198 millions, two million tons higher than the estimated output this year.

Simon noted that the projected two million tons increase in production would be quite realistic given the current level of demand both from overseas and local buyers.

"Projecting an output increase of more than two million tons would be too high, and could also cause prices to decline," he added.

State electricity utility PT Perusahaan Listrik Negara (PLN) will become the country's top coal buyer in the coming years.

Under the so-called "crash program", PLN is currently building a number of coal-fired power plants to provide an additional power supply of 10,000 megawatts by the end of 2009.

The demand from other industrial users, such as cement producers and smelting plants, is also on the rise as most of them are switching to cheaper coal energy due to the rise in oil and gas prices.