Indonesian Company to Begin Exporting Coal to China

Indonesia’s Medco Energi Internasional is shortly to start high-caloric thermal coal exports to China later this year.

Medco Energi Mining Internasional chief executive Arie Prabowo Ariotedjo said of the exports, "They are in line with our portfolio plan, which is to develop our non-oil and gas energy business. This will be our first coal production project. We are selling (coal) to China through a European trader," The Jakarta Post reported.

According to Arie, Medco Energi Mining Internasional intends initially to produce 500,000 tons of coal at the outset, with production escalating to one million tons by 2014, virtually all of which will be exported to China.

Indonesia is the world's top exporter of thermal coal, and the government estimate that the country’s mines can increase output by at least 10 percent annually up to 2016, with coal-mining industry group advocates stating that by the end of the year production could reach 340 million tons. Most of Indonesia's high-calorie coal, used to generate electricity, is exported to China, Japan and Europe and will play an increasingly important role in bilateral trade, as in 2010 China’s investments in Indonesia were a paltry $173.6 million, according to Indonesia’s Investment Coordinating Board (BKPM).

By. Charles Kennedy, Deputy Editor OilPrice.com