Indonesia May Raise Coal Output

It was only at the end of last week that the government of Indonesia was hailing the new direction it was embarking on in biofuels in an effort to reduce the use of fossil fuels and thus lessen pollution levels.

Now, in a Business News report it seems that the government wants to increase production at
least 9 percent next year as the country starts building a series of coal-fired power stations. Indonesia is the world's largest exporter of coal used to generate electricity.

Indonesia's coal output will reach more than 180 million tons in 2007 from 165 million tons this year, Jeffrey Mulyono, chairman of the Indonesian Coal Mining Association said in a July 7 interview. Indonesia which overtook Australia as the world's largest power-station coal exporter last year has more than doubled production in the last five years.

Indonesia wants to add 20,000 megawatts of coal-fired stations by 2010. That may add as much as 70 million tons of domestic demand for the fuel Mulyono said.
Most of the additional production may be so-called low-rank coal that is cheaper and generates less power than other grades Mulyono said. The majority of the country's coal mines are in Kalimantan.

Indonesia may export 125 million tons of coal this year from 117.9 million tons last year according to the association. Its main export markets are Japan, South Korea and Taiwan. Coal sales within Indonesia are expected to rise about 13 percent to 40 million tons this year.

Almost all coal produced in the country is thermal coal used to generate power. Prices of the fuel in the spot market have jumped 29 percent this year after China cut exports to meet its domestic needs.