The global financial crisis has had a huge negative impact on the credit, equity and coal markets, but Adam Worthington, head of Asian utilities and coal, Macquarie Research, said he is seeing early signs of recovery in Southeast Asia’s coal demand.
Southeast Asia’s leading coal producer is Indonesia, followed by Vietnam, Thailand and the Philippines. Strong demand from the still rapidly growing economies of China and India has pushed Asian coal prices to well over US$ 85/t recently, compared with US$ 50/t at the end of 2008.
The main players
Indonesia – both wooed and rebuffed
Indonesian coal consumption is expected to rise from 46 million t last year to 68.3 million t this year. Despite the economic slowdown, the country’s electricity consumption is still rising and is expected to expand by 6% next year.
Despite signs of Government intervention (such as the new mining law) and slumping production, Indonesia’s coal mining industry is starting to attract admirers and suitors from abroad. The Indonesian Government is planning to more than double the share of coal in the energy mix to 33% by 2025. India’s state-run Power Trading Corp. (PTC), Thailand’s Banpu, Xstrata and Peabody Energy have declared their intentions to acquire Indonesian mines.
However, not all mining companies are as enamoured with Indonesia. Last month, Australia’s BHP Billiton shocked the industry when it announced its exit from Indonesia’s mining and transportation sectors after a 25 year presence. BHP’s surprise decision will result in the loss of 450 direct jobs from the Lahai operations in Haju. Some investors may share BHP’s negative view of Indonesia, following the Government’s announcement that it plans to limit the country’s lucrative coal exports, as well as raise royalty payments to the state.
Another source of concern is declining production. Indonesia, the world’s second biggest coal exporter after Australia, has been forced to scale back production as both domestic and international customers have been reducing demand.
Thailand and the Philippines, full steam ahead!
Coal’s share in Thailand’s energy mix will rise from 21% last year to more than 26% in 2016, according to the Electricity Generating Authority of Thailand (EGAT). The country is planning to install some 4000 MW of new coal-fired power capacity, with a fuel requirement of 10.74 million tpa.
The Philippines’ Alcantara Group has been given the green light to build a large coal-fired power plant in Sarangani province that could push up demand for coal in the country.
Vietnam, keeping up with demand
Vietnam’s coal production has fallen 6.8% to 17.57 million t for the first five months of the year, said the General Statistics Office. Electricity demand and production, meanwhile, have continued to climb, while electricity production rose by an estimated 5.7% to 31.8 billion kWh over the same period.
The Vietnamese Government has ordered state coal monopoly, Vinacomin, to fast-track the development of the country’s biggest coal deposits. This is part of a long-term plan to enhance the nation’s energy security, as well as raise export earnings. The Government is expected to invite foreign participation and to set aside some of the production for exports.
Author: Ng Weng Hoong, a World Coal contributing author.
Read the article online at: https://www.worldcoal.com/coal/30092009/southeast_asian_coal_surviving_economic_downturn/