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Beyond Indonesia: coal in Southeast Asia

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World Coal,

In a world of uncertain outlook for coal, two regions are most often held up as examples of increasing coal demand: India and Southeast Asia. The International Energy Agency’s (IEA) Medium-Term Coal Market Report 2015 (MTCMR2015) is a good example of this,1 calling India and the Association of Southeast Asian Nations (ASEAN) “the two remaining growth engines” of coal demand.

“While India has an ambitious and accelerating renewable investment programme, the scale of electricity need is such that new coal investments and further growth in coal consumption are inevitable,” the MTCMR2015 concludes. “Key ASEAN countries are in a very similar position: energy access and poverty reduction ambitions drive coal investments in Indonesia, Viet Nam and the Philippines.”

In Southeast Asia, “coal is becoming the fuel of choice due to its availability and affordability,” Benjamin Sporton, CEO of the World Coal Association (WCA), told World Coal. “Indeed, the IEA has forecast demand for coal in Southeast Asia to grow by 4.5% every year to 2040 and its share of power generation to rise from 32% to 50%.”

Beyond such generalities, a number of specific drivers lie behind Southeast Asia’s push into coal. In the case of the region’s coal giant, Indonesia, it is the fuel’s ample availability. Indonesia is developing significant plans to expand its generation capacity and much of this will be based on its extensive domestic coal resources.2 This article, however, will focus on those less-well-endowed Southeast Asian countries that are nevertheless turning to coal (upending a global trend) at the expense of natural gas.

According to Global Coal Plant Tracker, an online resource providing information on existing and proposed coal-fired plants, a number of Southeast Asian countries feature in the list of countries with the highest coal generation pipelines.3 Vietnam sits fifth on the list (behind China, India, Turkey and Indonesia) with 30 620 MW of planned coal generation capacity (including announced, pre-permit developments and permitted developments) and 15 780 MW under construction – although exactly how much will be built is an open debate (see discussion below).

Myanmar sits eighth on the list with 14 050 MW of planned coal capacity additions and 445 MW under construction. The Philippines is 13th with 10 046 MW of planned capacity and 3780 MW under construction, while Thailand lies 16th with 7425 MW of planned and 600 MW under construction. Global Coal Plant Tracker also notes projects in Cambodia, Malaysia and Laos in its latest list of proposed coal plants by country. Altogether, Global Coal Plant Trackers notes 212 468 MW of coal-fired generation that is planned in Southeast Asia with 67 549 MW under construction.

There is a general desire to boost coal in the energy mix at the expense of natural gas “across the board in Southeast Asia”, Dr Bart Lucarelli of Roleva Energy, told World Coal. “In the case of Thailand and Malaysia, this shift from gas to coal is due to their well-documented overreliance on gas in their power sectors (around 67% in the case of Thailand and 55% for Malaysia). For other countries, such as Vietnam and the Philippines, their moves to coal-fired power plants are due to a lack of gas resources and the simple fact that coal-fired power offers the cheapest and most reliable alternative to all other power sector sources, including gas.”

That issue of cost is key and effectively rules out other alternatives to gas, such as renewable generation (solar and wind) or nuclear – as Lucarelli explained: “At this time, solar and wind plants produce electricity at a cost that is significantly higher than electricity produced from coal-fired power plants. Coal’s cost advantage over solar will likely decline over the next decade but will not disappear entirely. Although nuclear plants produce electricity at a lower cost than solar and wind electric plants, they are still more expensive producers of electricity than coal plants.”

There are also additional complications beyond cost that further limit the appeal of renewable and nuclear generation: for solar and wind, it is the perennial issue of resource intermittency (or the prohibitive cost of battery storage as a solution to this). For nuclear it is an issue of the public's perception of nuclear as an unsafe technology.

According to Lucarelli, “a number of Southeast Asian governments have in the past expressed very strong interest in nuclear power as a means of reducing their CO2 emissions. But after the Fukushima nuclear disaster of 2011, these same governments have backpedalled on their initial ‘nuclear commitments’ and have dropped their nuclear power concepts from further consideration. Vietnam and Thailand are good examples of Southeast Asia putting the nuclear genie back into the lamp.”

Yet for all of this enthusiasm, not all planned coal-fired plants will come to fruition. Vietnam is a case in point here and has been described as a “graveyard for IPP projects”.4 Indeed, according to the Global Coal Tracker, 44 292 MW of coal generation projects in Southeast Asia were shelved or cancelled between January and July 2016 alone.5

Although a number of reasons could lie behind project delay or cancellation, the major downside risk in coming years will be environmental. Should Southeast Asian countries join others in a concerted global push to limit global temperature rise to “well below 2°C”, as stipulated under the Paris Agreement of COP21 last year, the number of abandoned projects will rise significantly as coal’s role in the global generation mix is necessarily diminished.


Vietnam is the second-largest coal producer in Southeast Asia. In 2015, the country produced about 41.5 million t of coal, according to the BP Statistical Review of World Energy, a rise of 5% on 2014.6 Virtually all of this production is located in the north of the country and is mined by Vinacomin, the state-owned mining company.

Historically much of this production was exported but, with the government’s push to develop coal-fired power generation in the country, Vietnam became a net importer of coal last year – and the country’s imports have risen significantly this year. According to Platts, over the first seven months of the year, Vietnam imported 8.38 million t of coal compared to just 2.72 million t a year ago with Australia, Russia and Indonesia the top suppliers.7 In July alone, imports rose 141% to 1.21 million t.

Competition from imports and a rise in the natural resource tax saw Vinacomin actually cut its sales target for the year to 36.5 million t from 39 million t, Platts reported. Domestic production was slightly down in 1H16 at 21.2 million t, compared to 21.4 million t over the same period in 2015.

Looking ahead, imported coal is likely to continue to overshadow domestic production, despite the country's potentially large coal resource base – particularly in the Red River Delta, under which reportedly lies 210 billion t of coal. Extraction here is problematic, however, as the area is also the country’s main rice producing region, meaning coal would need to be mined using underground methods – if at all.

“The sub-bituminous coals under the Red River Delta are a major resource but extraction by underground means will subside the fertile rice growing areas,” Peter Gunn, a geologist who has worked in Vietnam, told World Coal. “Vinacomin are looking at this resource but rather than source coal from the Red River Delta and impact their own food supply, they are more likely to design and build power plants to run off of imported coals, such as the coal from Indonesia, which can be delivered far more cheaply than any operation could hope to provide from the Red River Delta.” There has also been very limited exploration work undertaken in the delta, noted Lucarelli, who called the potential coal resources there, “at best ‘inferred resources’ and maybe even the most speculative coal category of all: ‘hypothetical resources’”.

Without development of the Red River Delta, Lucarelli questions Vietnam’s ability to maintain even its current level of production much past 2020: “Vietnam has already reached its production limit for anthracite resources located within the Quang Ninh basin. By 2020, Vietnam’s level of anthracite production is likely to enter into a period of rapid decline.”

Lucarelli continued: “At best, Vietnam will be able to maintain its production levels through 2030. The anthracite resources (as opposed to reserves) may be there, but mining costs are increasing, as Vinacomin needs to mine coal at deeper depths. It may already be cheaper to procure imported sub-bituminous coals when both are considered on a dollar-per-GJ basis.”

Looking at coal-fired power generation development in the country and, as noted above, Vietnam has substantial plans to develop its coal-fired fleet. Yet Lucarelli adds a note of skepticism here too, noting the “agonisingly long reviews and seemingly endless negotiations” the government of Vietnam subjects power projects to – particularly those proposed by independent power producers (IPPs).

“As a direct result of Vietnam’s difficult regulatory environment and the uncertainty this environment creates for investors, the amount of new coal-fired power plant capacity that has been brought into commercial operation over the past five years is a very small fraction of what the government of Vietnam announced 5 – 6 years earlier as part of its energy master plan,” Lucarelli said.

Meanwhile, its most recent energy master plan, which calls for an additional 21.1 GW of new coal-fired capacity by 2020 and an additional 36.5 GW by 2030, when coal is expected to generate more than 50% of the energy mix, is “not just challenging [but] an impossible dream, which will only serve to discredit the government of Vietnam in the eyes of the IPP community”.

Yet despite this strong skepticism over Vietnam’s power development plans, the country will still see some new coal-fired power plants come online – adding to demand for thermal coal in Southeast Asia. As Lucarelli concludes: even if only half of the government’s target ends up being built, “that would be very good news for Indonesian and maybe even Australian coal exporters.”

Thailand and its neighbours

Apart from Indonesia and Vietnam, Thailand is the only other Southeast Asian country to have its production figures listed separately in the BP Statistical Review of World Energy. The country produced 15.2 million in 2015,6 a fall of 15.7% on 2014’s 18 million t level. Thailand has a significant reserve of lignite in the north of the country, where it is produced for use in the lignite-fired Mae Moh power plant, which is owned by the country’s state-owned power company EGAT.

However, according to Lucarelli, coal development in Thailand is facing a number of issues that may force EGAT to rely on energy imports from coal-fired plants in neighbouring countries rather than building plants inside Thailand. Two challenges in particular are likely to hold down development of in-country coal-fired plants: domestic environmental opposition and a lack of deep-water port facilities into which coal could be imported, creating logistical complexity that will add to the cost of delivered coal.

Over the Thai borders in Laos, Cambodia and Myanmar, however, there are plans to build coal-fired power plants – in many cases by Thai companies – that would feed power back over the border.8

Earlier this year in Laos, the 1653 MW (net) Hongsa lignite plant was brought into commercial operation by its Thai IPP owners, Banpu and Ratchaburi Electric. Of the total capacity, 89% will be sold to EGAT under a 25-year cross border, power purchase agreement. There are also two coal-fired power plants under development that would supply their 1500 MW (gross) output into the Thai grid. All three plants will rely on the low-quality coals endemic to Laos rather than imported coal.

In Cambodia, there is at least one 2 x 1000 MW (gross) coal-fired power plant at an early stage of development by a Thai IPP. If built, the plant would utilise ultra-supercritical boiler technology and rely on imported coal. Plans to develop coal-fired power plants in Mynamar are even more vague and could rely on either domestic or imported coal. “At this time, many coal analysts are discounting the importance of Myanmar for the seaborne coal trade in Asia due to the many disappointments and prolonged delays for getting government project approvals,” summarised Lucarelli. Meanwhile in Thailand itself, EGAT is biting the bullet and planning to add new coal-fired power plants at Krabi and in Songkhla Province (Thepa project) in the deep south of the country. These plants will rely on imported coal, although it will be a logistically complex operation to get it there, especially for the Krabi project, due to the lack of deep-water ports mentioned above. In lieu of these, EGAT will need to rely on floating transhipment facilities to offload coal from large dry bulk vessels onto transfer barges, which will take the coal to shore.

A final caveat to Thailand’s coal story worth mentioning comes in the form of Bangkok-based company, Banpu (mentioned earlier in relation to its investment in the Hongsa power plant in Laos). As well as coal power facilities, Banpu also owns significant coal mining operations in Indonesia (through PT Indo Tambangraya Megah) and Australia (as Centennial Coal), as well as mining operations in China. In 1H16, the company reported coal sales of 19.57 million t with its Australian mines producing 6.45 million t of coal and its Indonesian mines producing 13.12 million t.9 So although, Thailand itself may not be embracing coal with particularly open arms, a Thai company is at the heart of the coal business in Southeast Asia.


Coal production in the Philippines takes place primarily on Semirara Island, where 8.5 million t was mined in 2014, according to a recent report by Sabrin Chowdhury, Commodities Analyst, BMI Research.10 Semirara Mining Corp. dominates production, although some 74 legal small-scale miners also exist in the country. These smaller-scale companies account for only 8% of the country’s output, however, with Semirara responsible for the remaining 92%.

Production is also expected to increase on the back of demand from the domestic power sector with the Philippines Energy Plan 2012 – 2030 stating that: “considering that coal remains a leading contributor to the country’s energy mix, the government continues to optimise the exploration, development, production and utilisation of indigenous coal reserves”.11

As a result, Chowdhury expects Filipino coal output to grow to 10.8 million t in 2020 on the back of annual growth of 4% between 2016 and 2020. Semirara is likely to provide the bulk of any production increase: the company is well established, mining the country’s only opencast mine. As the largest domestic player, it also enjoys “significant economies of scale [while] being in close proximity to nearby ports reduces transport costs,” Chowdhury said. There had also been moves to encourage coal exploration by companies aside from Semirara with Altura Mining Philippines awarded contracts by the government to explore and mine coal in the country in June 2015. Little headway has been made since then, however, as the company has focused on developing a lithium project in Australia. A recent analyst's report valued the company's coal assets in the Philippines as having zero value.12

Coal production is also challenged by the Philippine’s geography: “With coal reserves scattered over many islands, developing the infrastructure to mine and transport coal that is economically recoverable after identification will be difficult and time-consuming,” explained Chowdhury. Anti-mining protests by indigenous groups, environmentalists and the Catholic Church is also likely to challenge expansion of coal mining activities. As a result, the Philippines will remain a net importer of coal to feed a growing fleet of coal-fired power plants – with Indonesia as principal supplier. On the power side, Chowdhury puts growth in the coal-fired power generation at 6.3% a year between 2016 and 2020 with over 20 coal-fired power plants planned to come online by 2020. These will require an additional 10 million tpy of coal, according to the research company. The Philippines Energy Plan 2012 – 2030 is more bullish – expecting growth of 7.2% annually over the forecast period.13 According to the Department of Energy, coal accounted for 45% of electricity output in 2015.

Yet this year’s change in government may present a risk to such growth forecasts. In July, Bloomberg reported that the incoming environment minister would prioritise renewable generation over coal when approving permits for new power projects.14 “Why allow more coal plants? Why commit to a form of energy than has no future?” Gina Lopez said in an interview with Bloomberg. “I’m not keen on it. I’d have to be very convinced.” This would seem to put the Lopez-run Department of Environment and Natural Resources on a collision course with the Department of Energy, which has said the country will have to continue to rely on coal. “We have to find a balance,” said Energy Minister Alfonso Cusi in July. “Not everything can be renewable.

This “lack of cogency in the government” along with opposition from local governments pose the largest risk to coal-fired power development, concluded Chowdhury, with foreign investors reportedly now thinking twice about putting their money in the country.15


The story of coal in Southeast Asia is generally positive – but that is not to deny there are risks. Chief among these relate to the environment with the implementation of tighter regulations, such as carbon taxes, posing an “existential threat to the owners of coal-fired power plants in Asia,” according to Lucarelli. Yet this risk should not be overblown.

“My view is that southeast Asian countries will not commit economic suicide by taking strong climate change actions,” Lucarelli continued. “Most of their actions will be window dressing. They will subsidise the development of renewable energy projects and implement energy conservation programmes but they will not shut down operating coal-fired power plants unless they are already scheduled for retirement. Given the young ages of most of Southeast Asia’s coal-fired fleet, the demand for coal in Southeast Asia is, in my opinion, secure. Southeast Asian governments rationalise their lack of action as inconsequential, since their power sectors and their CO2 emissions are very small relative to China, India, Japan and Europe, and their lack of action on CO2 emissions will not doom Planet Earth.”


  1. Medium-Term Coal Market Report 2015 (International Energy Agency, Paris; 2015), p. 15.
  2. For more on the Indonesian coal industry, see: ROWLAND, J., ‘Down But Not Out’, World Coal, Vol. 25, Issue 5 (May 2016), pp. 16 – 22.
  3. Global Coal Tracker – Proposed CFPs by Country (MW).
  4. Lucarelli in ROWLAND, J., ‘Down But Not Out’, World Coal, Vol. 25, Issue 5 (May 2016), p. 18.
  5. NACE, T., ‘Slowing the Coal Plant Pipeline: Mid-2016 Results from the Global Coal Plant Tracker’ (6 September 2016).
  6. BP Statistical Review of World Energy – Data Workbook (June 2016).
  7. Vietnam’s July coal imports surge 141% on year to 1.31 million mt’, Platts (16 August 2016).
  8. My thanks to Dr Bart Lucarelli for providing this overview of coal-fired power projects in Laos, Cambodia and Myanmar
  9. Banpu Releases First-Half 2016 Results Highlights Balanced Growth and Sustainability’ (17 August 2016).
  10. CHOWDHURY, S., ‘Industry Trend Analysis – Energy Demands to Drive Production and Imports Despite Protests’, BMI Research (5 February 2016).
  11. Philippine Energy Plan 2012 – 2030 (Department of Energy), p 7.
  12. Altura Mining (AJM.ASX): Mining proposal lodged; Mining leases granted’ (Beer & Co. Equity Research; 9 September 2016). Available at: 
  13. Philippine Energy Plan 2012 – 2030, p. 11.
  14. YAP, C., CALONZO, A. and MURTAUGH, D., ‘It Just Got Harder to Build Coal Plants in rhe Philippines’, Bloomberg (11 July 2016).
  15. Rodrigo Duterte may undo the economic gains of recent years’ The Economist (14 September 2016).


For sharing their thoughts on the Southeast Asian coal sector, my thanks to Peter Gunn, Coal Marketing International; Dr Bart Lucarelli, Roleva Energy; and Benjamin Sporton, World Coal Association.

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