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Sunday, 20 June 10
OUR COAL: ITS DEVELOPMENT AND CONTROVERSIAL ISSUES
 Indonesia’s production of coal has been growing amazingly. In the mid 1980s, national coal production was less than 1 million tons per annum, whereas energy planners (in the fourth Five Year Development Plan: 1989-1994) pointed at 10 million tons as the national production target.
The current production has jumped dramatically, recorded as 237 million tons in 2008 (predicted to achieve 270 million tons this year), making Indonesia a world class producer and the largest exporter of coal around the globe. The skyrocketing growth of our coal production has also incited many controversial issues.
Coal is considered as the dirtiest among fossil fuels, making environmentalists oppose their wide use
as fuel.
However, the proposal for ceasing use of coal — power generation, for instance — would be challenged by power utilities demanding low cost fuel that coal may offer and by the government, which has the responsibility to provide electricity as well as have revenue from exploiting its energy resources.
Despite the world’s rising anxiety of global warming, IEA (International Energy Agency: World Energy Outlook 2009) statistics shows that the world consumption for coal, for the last decade, is still growing the fastest among primary energy sources.
The environmental problem associated with coal in Indonesia is not limited to green houses gases (GHG), but also damage and pollution since its exploitation, transportation and uses to post mining.
It is easy to find where many coal fields are not mined appropriately according to “good mining and environmental practices”, coal transportation is not considering safety standards and is damaging rivers, (public) roads and seashores.
The coal mining has polluted the land, water and air of especially Kalimantan, where more than 90 percent of Indonesia’s coal mining operations take place.
It is sad that many of the previous mining areas have been abandoned without being properly reclaimed, whereas thousands of hectares of the island’s tropical forests have been converted into desert.
The soaring exploitation, including its negative impact on the environment, has a strong correlation with the number of licensing/permits awarded.
The introduction of the 1999 Regional Autonomy Law, subsequently followed by the 1999 Fiscal Balancing Law between the Central and Regional Governments have — to some degree — impacted on the coal licensing regime, where larger authorities had been given to regional/local governments.
Under the new licensing regime by local governments, requirements for coal permits tend to be relaxed whereas monitoring has not been done properly.
As a result, the number of permits (Mining Authorization/KP) has been growing considerably (currently 462, of which 169 are producing), coal production increases, but also environmental problems and the issues of illegal mining exist.
The question of who really owns the KP licenses exists, which was defined as that it can be owned by Indonesian national/companies only.
While the largest part of coal in Indonesia are being produced by large companies (the holders of Coal Contract of Work/PKP2B), some coal is mined by small scale and illegal miners.
It is believed that a significant amount of coal has been produced by illegal miners (some 5 million tons annually) and part has gone to meet export demand.
Wherever in the world, illegal miners lack interest in responsible mining and mine rehabilitation practices. Illegal mining is a problem for potential investors, the environment and government revenues.
The government has introduced measures to crack down on problems, including arresting illegal miners.
However, it cannot be the only solution since illegal mining is actually rooted in underemployment, local poverty and weak law enforcement, while the number of people involved in these activities is quite significant.
An alternative to confrontation to illegal miners by the central government (who awards the large scale PKP2B mining license) should be a cooperative and more comprehensive approach.
“Despite the world’s anxiety of global warming, IEA statistics shows that the world consumption for coal is still growing the fastest among primary energy sources.”
Work together with local/rural governments and communities to reduce poverty, educate/assist the illegal miners to increase their awareness on good mining practices (including mine rehabilitation), provide transition period fiscal incentives to encourage illegal mining toward the regulated mining sector, among others.
It needs to maintain an appropriate balance between the soaring exports of coal (about three quarters of production on average) and the domestic growing demand for the same fuel.
Push for exports is still coming largely from the traditional East Asians (Japan is the largest), while the coal-hungry India and China are also increasing their demand for our coal.
The exports will be competed with by the Blue Print for Energy Management 2005-2025 pointing out that one third of Indonesia’s energy primary energy mix in 2025 is to be supplied by coal, (the current share is about 15 percent).
Even though it is often mentioned that our coal reserves are quite large (current proven reserves of 5.5 billion tons; estimated resources of 105 tones) and that our reserves for coal are much larger than that of oil and gas, we should watch their fast rate of exploitation cautiously.
It needs to recalculate the benefit of exploiting them, taking into account their damage to the environment and what is left post mining. Where have all the revenues from exploiting that coal gone? Is the escalating export not jeopardizing the domestic energy security in the near future?
We have ample experiences, for instance in exploiting the resources-rich Kalimantan. The forests, oil and gas reserves have been exploited for about four to five decades, but it seems that the island has not enjoyed the fruits of the excessive exploitation: the current regional economy remains weak, infrastructure is poor and energy supplies for local uses have not been secured.
It needs to promote the terms “resources balance, depletion, sustainability”, start internalizing the costs of environmental impact and enforce those concepts into workable policies for our coal mining development.
The writer is the senior energy planner and an economist with the National Development Planning Agency. The opinions expressed are his own.
Source: The Jakarta Post ( Hanan Nugroho)
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Thursday, 15 July 10
NO IMPROVEMENT IN THE DRY BULK MARKET - INTERMODAL
Broker’s insight
With the Baltic Dry Index today (13/7/2010) standing at 1,790 points - the lowest point since early May 2009 - ...
Thursday, 15 July 10
IRON ORE PRICING MECHANISMS PUT ON THE SPOT
THE new iron ore pricing mechanisms that killed off the annual benchmark system are coming under pressure. The spot price of the steel feed has fall ...
Thursday, 15 July 10
NTPC TO PURSUE COAL MINE ACQUISITION IN AUSTRALIA, INDONESIA - BUSINESS STANDARD
Business-Standard reported that, NTPC, the India’s largest power producer, has set the ball rolling to acquire coal mines or form joint ventur ...
Wednesday, 14 July 10
SUCCESSFUL COMMISSIONING OF GTLE LOW RANK COAL UPGRADING PLANT
COALspot.com: GTL Energy Ltd (GTL Energy) announced that construction and commissioning of its proprietary ‘first-of-a-kind’, low rank c ...
Tuesday, 13 July 10
BUMI TO PRODUCE MORE THAN 67 MILLION TONS OF COAL IN 2010
COALspot.com: Bumi resources, Indonesia’s largest coal producer has previewed its operating results in KPC/Arutmin for Jan – Jun 2010. A ...
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- Globalindo Alam Lestari - Indonesia
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- Coal and Oil Company - UAE
- Australian Coal Association
- The Treasury - Australian Government
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cement Manufacturers Association - India
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- The University of Queensland
- European Bulk Services B.V. - Netherlands
- India Bulls Power Limited - India
- MS Steel International - UAE
- Electricity Authority, New Zealand
- Rashtriya Ispat Nigam Limited - India
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- Maheswari Brothers Coal Limited - India
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- New Zealand Coal & Carbon
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- Intertek Mineral Services - Indonesia
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- Meenaskhi Energy Private Limited - India
- Directorate Of Revenue Intelligence - India
- Price Waterhouse Coopers - Russia
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- Sinarmas Energy and Mining - Indonesia
- Thiess Contractors Indonesia
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- Tamil Nadu electricity Board
- Economic Council, Georgia
- The State Trading Corporation of India Ltd
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- Commonwealth Bank - Australia
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- Heidelberg Cement - Germany
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- Standard Chartered Bank - UAE
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- Sindya Power Generating Company Private Ltd
- Ministry of Transport, Egypt
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- Coalindo Energy - Indonesia
- Indian Energy Exchange, India
- Indogreen Group - Indonesia
- PNOC Exploration Corporation - Philippines
- Central Electricity Authority - India
- Orica Australia Pty. Ltd.
- Metalloyd Limited - United Kingdom
- Minerals Council of Australia
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- Samtan Co., Ltd - South Korea
- McConnell Dowell - Australia
- Miang Besar Coal Terminal - Indonesia
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- Pipit Mutiara Jaya. PT, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Manunggal Multi Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Marubeni Corporation - India
- Vedanta Resources Plc - India
- IHS Mccloskey Coal Group - USA
- Bukit Asam (Persero) Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Ceylon Electricity Board - Sri Lanka
- CNBM International Corporation - China
- Dalmia Cement Bharat India
- Independent Power Producers Association of India
- PowerSource Philippines DevCo
- Directorate General of MIneral and Coal - Indonesia
- Baramulti Group, Indonesia
- Mjunction Services Limited - India
- Salva Resources Pvt Ltd - India
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- White Energy Company Limited
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- GAC Shipping (India) Pvt Ltd
- Indian Oil Corporation Limited
- Bulk Trading Sa - Switzerland
- GMR Energy Limited - India
- Rio Tinto Coal - Australia
- Xindia Steels Limited - India
- Oldendorff Carriers - Singapore
- Videocon Industries ltd - India
- SMG Consultants - Indonesia
- Ministry of Mines - Canada
- Siam City Cement PLC, Thailand
- Neyveli Lignite Corporation Ltd, - India
- Energy Development Corp, Philippines
- Eastern Coal Council - USA
- Ind-Barath Power Infra Limited - India
- Africa Commodities Group - South Africa
- Parliament of New Zealand
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- Krishnapatnam Port Company Ltd. - India
- Semirara Mining Corp, Philippines
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- Leighton Contractors Pty Ltd - Australia
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- Petron Corporation, Philippines
- Borneo Indobara - Indonesia
- Goldman Sachs - Singapore
- Global Green Power PLC Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Eastern Energy - Thailand
- Riau Bara Harum - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Aditya Birla Group - India
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- SN Aboitiz Power Inc, Philippines
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