Coal business in Indonesia getting sunshine. The newly elected government in India needs around US$500 billion in infrastructure spending in the 5 years ending in fiscal year 2012. India is facing a shortage of about 25,000 Mw power all by means of peak hours. There are plans to add roughly 78,000 Mw of power all by means of the current five-year plan.
Some enormous Indian companies are making their best efforts to obtain mines overseas principally in Indonesia, South Africa, Mozambique, Australia etc. for their ambitious power projects in India. these days Indonesian law does not permit a foreign company to directly obtain the mines. There is no clarity as to how foreign companies can have mining rights and take off production.
Indonesia's government needs to accelerate reforms and changes in mining and energy regulations developed to give direct control to foreign investors, in order to win confidence and attract/invite major international coal companies into Indonesia.
Indonesia coal industry has come from nowhere to challenge Australia as the world's largest exporter of thermal coal and is expected shortly to topple Australia as the largest coal exporter. Indonesia's strategic geographic location makes it the most preferred country for Indian companies for its proximity to the country, which means lower ocean freight costs and better timing compared to other countries such as Australia.
Indonesian coal is exported around the globe, including to India, Korea, Taiwan, Japan, EU, US and China which itself is a major coal producer but imports coal to meet the requirement of domestic industries.
The growth in Indonesia's coal exports reflects the ability of its coal industry to respond to the fast growth in Asian demand for thermal coal, helped by unconstrained transport and port aptitude. A significant proportion of coal transport in Indonesia is water based, which allows for coal to be transported along rivers via barges to the open sea for loading onto bigger vessels
The quality of Indonesian coal is much better than Indian coal. The gross calorific value of Indonesian coal ranges between 5,000 and 6,500 kilo calories per kilogram (kcl/kg); while for Indian coal it is only 3,000-4,500 kcl/kg.
India's ambitious plans to generate an additional 78,000 Mw of power in 5 years may face hurdles if Indonesia goes ahead with plans to apply a domestic market activity (DMO) policy to restrict coal exports to take care of domestic demand.
India is today one of the fastest growing economies and also has a shortage of power supply. Indonesia is one of the peaceful countries with immense natural resources and exporting coal to numerous countries for use in power plants for generating energy but it is paradoxical that Indonesia is short of energy. numerous Indian companies are capable of sharing power technology and placing up mega power plants in Indonesia.
Indonesian private companies can pay for equity stakes in India's power plants in exchange for long-term coal supply. Since India is today one of the fastest growing economies and also has a shortage of power supply then such deals can be beneficial to both parties.
Some coal firm in Indonesia still welcome to immense investors from all around the world to take through or joint venture in coal business industry in Indonesia.