Indonesia to acquire coal mines for $1b

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Indonesia’s voracious energy demand has spurred state electricity utility Perusahaan Listrik Negara (PLN) to establish a $1 billion budget for acquiring stakes in private coal miners, namely PT Adaro Energy and PT Bumi Resources’ unit KPC.

The coal needs of PLN are expected to double within four years, with consumption rates increasing 9 per cent annually in Southeast Asia’s largest economy, rising to at least 116.7 million tonnes in 2016, up from an expected 57.3 million this year.

“Long-term PLN has to own the mines itself, because, with demand as big as ours, there is no way we cannot have security,” Helmi Najamuddin, the head of PLN’s coal division, told Reuters in an interview.

The state utility produces 85 per cent of Indonesia’s current power output at around 32,000 megawatts per year.

Adaro Energy and KPC are already major suppliers, but concerns over the country’s future domestic needs have lead industry leaders to push for a more proactive strategy in acquiring assets, leading to the establishment of PT PLN Batubara, a subsidiary tasked with acquiring coal mines.

“If possible we’d like [shares in] the likes of Adaro and KPC. We’ve started [purchasing], but just small ones to begin with,” Najamuddin told Reuters. The company’s main operations are in South Kalimantan on the island of Borneo, and a power plant in operated in Central Java.

Indonesia’s second largest coal producer, Adaro Energy, recently announced plans to build a $3.5 billion coal-fired power plant in South Sumatra.

The announcement comes on the heels of the coal giant lowering its 2012 annual production target from 50 to 53 million tonnes to 48 to 51 million tonnes, further stoking energy concerns.

These worries have lead policymakers to approve the export reduction of liquefied natural gas and raw metal ores, the latter set to take effect this year.

Outlying regions outside of the main island of Java experience rolling brownouts detrimental to business, promising to cut Indonesia’s economic growth story short if left unchecked. About 70 per cent of Indonesia, a country with the world’s fourth largest population, lacks access to electricity, mostly in regions such as Papua and Sulawesi.

Indeed, the output shortfall incurred by Adaro Energy is the result of a surfeit in supply, not lowering demand.

By 2017, coal is expected to make up 58 per cent of Indonesia’s energy mix, up from 51 per cent this year.

 

 

 

 

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Reading Time: 2 minutes

Indonesia’s voracious energy demand has spurred state electricity utility Perusahaan Listrik Negara (PLN) to establish a $1 billion budget for acquiring stakes in private coal miners, namely PT Adaro Energy and PT Bumi Resources’ unit KPC.

Reading Time: 2 minutes

Indonesia’s voracious energy demand has spurred state electricity utility Perusahaan Listrik Negara (PLN) to establish a $1 billion budget for acquiring stakes in private coal miners, namely PT Adaro Energy and PT Bumi Resources’ unit KPC.

The coal needs of PLN are expected to double within four years, with consumption rates increasing 9 per cent annually in Southeast Asia’s largest economy, rising to at least 116.7 million tonnes in 2016, up from an expected 57.3 million this year.

“Long-term PLN has to own the mines itself, because, with demand as big as ours, there is no way we cannot have security,” Helmi Najamuddin, the head of PLN’s coal division, told Reuters in an interview.

The state utility produces 85 per cent of Indonesia’s current power output at around 32,000 megawatts per year.

Adaro Energy and KPC are already major suppliers, but concerns over the country’s future domestic needs have lead industry leaders to push for a more proactive strategy in acquiring assets, leading to the establishment of PT PLN Batubara, a subsidiary tasked with acquiring coal mines.

“If possible we’d like [shares in] the likes of Adaro and KPC. We’ve started [purchasing], but just small ones to begin with,” Najamuddin told Reuters. The company’s main operations are in South Kalimantan on the island of Borneo, and a power plant in operated in Central Java.

Indonesia’s second largest coal producer, Adaro Energy, recently announced plans to build a $3.5 billion coal-fired power plant in South Sumatra.

The announcement comes on the heels of the coal giant lowering its 2012 annual production target from 50 to 53 million tonnes to 48 to 51 million tonnes, further stoking energy concerns.

These worries have lead policymakers to approve the export reduction of liquefied natural gas and raw metal ores, the latter set to take effect this year.

Outlying regions outside of the main island of Java experience rolling brownouts detrimental to business, promising to cut Indonesia’s economic growth story short if left unchecked. About 70 per cent of Indonesia, a country with the world’s fourth largest population, lacks access to electricity, mostly in regions such as Papua and Sulawesi.

Indeed, the output shortfall incurred by Adaro Energy is the result of a surfeit in supply, not lowering demand.

By 2017, coal is expected to make up 58 per cent of Indonesia’s energy mix, up from 51 per cent this year.

 

 

 

 

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