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Pricing remains the key challenge for the coal industry in 2014

While coal remains the main commodity in South Asian region, the market seems to be close to the bottom as the coal prices have reached new lows pressed down by oversupply.

“The coal price has been too low for too long for any of us to see it as a minor correction”, remarked Henry Hely Hutchinson, Managing Director, Coaltrans Conferences Ltd, in his opening remarks on 2nd June.

After the prices skyrocketed following the Australian floods in 2010-2011 many new players entered the market eventually pulling down the prices. The demand continues to grow in the region while there’s no sign of decreasing supply.

Top thermal coal exporter Indonesia is well on track for its annual production target of 426m tons while the country’s production of coal between January –April 2014 rose by 5% to 147 million tons compared to 2013, year on year.

The same volume of production is envisioned for next year as the Indonesian government expects domestic energy demand to grow at 7% per year, requiring 6000mw of new power capacity to be built in Indonesia annually, pointed out Dr R Sukhyar, Director General for Mineral Resources, Coal and Geothermal Affairs, Indonesia.

Dr R Sukhyar outlined the key priorities of Indonesia’s energy strategies: these include cutting back on oil consumption, increasing gas exploration and production, putting more focus on renewables and attending to the domestic energy availability to support the demand growth due to further industrialization, urbanization and population increase.

The energy diversification and sustainable development plans imply shifts in energy mix reducing the share of coal to 30% of fuel mix by 2015 and 25% by 2050 in favour of geothermal and renewables. However, given rising energy demand in Indonesia and the rest of the region, cheap coal is the most likely source of energy to support this power generation growth in Indonesia. The domestic energy obligations put Indonesia in a tough situation of balancing its interests as an importer with benefits from accessible coal energy.

This content is provided by Coaltrans Conferences for informational purposes only, and it reflects the market and industry conditions and presenter’s opinions and affiliations available at the time of the presentation.

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