The demand for thermal coal both domestically and internationally has, in line with the increase in the global capacity for steam power plants, continued to grow for the last several years. The Company constantly strives to play a significant role as a producer both domestically and internationally. An increase in production to 111 million tonnes per year that will be achieved in 2012 and the expansion to non-coal mining will continue to be implemented as a part of the Company’s strategy to enhance business to provide maximum returns to the investors.
Market Conditions and Corporate Strategies
As the most widely-utilized energy resource apart from oil, the ever-increasing demand for coal is due to its utilization in power plants. The International Energy Agency (IEA) affirms that between 2006–2030, world coal consumption is predicted to increase by 49% from 127.5 billion tonnes in 2006 to 190.2 billion in 2030. IEA also forecasts a growth trend in coal consumption between 2005–2015, with an average rate of 2.6% per annum, after which the growth will decelerate to 1.7% per annum between 2015–2030.
By the end of 2009, the USA, China and India have become the world’s largest coal consuming nations with a trend that will still progress for the next several years. In 2006, the USA consumed 22.5 billion tonnes of coal or equivalent to 48% of the total world’s coal consumption. To meet the power plants’ needs, the total coal demand (both thermal and coking) for the USA is forecast to increase to 26.6 billion tonnes by the end of 2030.
China’s Coal Market
In order to boost the production of steel and power plants, from 2006 – 2008, China’s total consumption for coal (both thermal and coking) had increased to 6.8% or 1.4 billion tonnes - equivalent to 42.6% of the world’s total coal consumption. This need exceeds the production capacity which has forced China to import both types of coal. In 2009, China increased imports of thermal coal and coking coal by 167% and 400% respectively, in contrast to the previous year, 2008.
As an outline, in the nine months from September 2008, China exported just 5.9 million tonnes of thermal coal. Due to the decline in production capacity and the pressure from the high demand by power plants, by September 2009, China had become the world’s largest thermal coal importer at 46.4 billion tonnes. As coal production increased in 2010, China’s demand from the world’s coal market has been forecasted to downsize to approximately 45 million tonnes. However, in the following years it is forecasted to recuperate at relatively stable rate, and China’s demand will be 50 million tonnes in 2011 and 60 million tonnes in 2015.
India’s Coal Market
A similar condition had also occurred in India. In 2008, India’s total coal consumption increased by 8.4% to 231 million tonnes or equivalent to 7% of the world’s total coal consumption. The insufficiency of domestic coal supply has increased the import of coal. Between 2003–2008, India’s coal import was 17.1%. Meanwhile, India’s coal export suffered a drop with CAGR of -0.1%. In order to maintain productivity, India’s steel mills imported approximately 50% of their coal supply.
The ever-increasing need for coal used in power plants has contributed in the growth in India’s coal demand. By July 2009, India had imported 32.6 million tonnes of thermal coal, or 55% higher compared to July 2008. India’s increase in demand has been forecast to continue in the next few years. In 2010, India’s thermal coal demand is forecast to be approximately 53 million tonnes. In 2011, the figure will increase to 63 million tonnes and 108 million tonnes in 2015.
In general, India’s import of coal is estimated to increase within the next few years. To meet the ever-increasing domestic demand, in the following three years, India’s coal import (both thermal and coking) will increase by ten times to be approximately 40-45 million tonnes.
Coal Prices
The global economic crisis in 2008 caused a significant decline in coal prices; from US$ 180 per metric tonne to US$ 75 per metric tonne at the end of 2008. As the world economic situation improved and the demand in coal increased, the coal price has stabilized with an increasing trend, since the second semester of 2009. IEA has forecast that the coal price will continuously increase, to US$ 85 per metric tonne in 2010 and to US$ 90 per metric tonne in 2012.
As a country with 20 billion tonnes of coal reserves and a potential of 90 billion tonnes, Indonesia plays an important role in the world’s coal market. In the last decade, Indonesia has shown a significant increment in coal consumption. In 1997, domestic consumption was 13.2 million tonnes. This then increased by 243% to 45.3 million tonnes in 2007. Following the completion of 10,000 MW acceleration phase II, the domestic demand for coal used for power plants will increase by approximately 65-70 million tonnes per annum. By 2010, when all PLTU (coal-fired power plants) projects are operating, domestic coal consumption has already been predicted to reach 90 million tonnes or 40 million tonnes higher compared to today’s demand.
As such increases in demand, domestic coal production continuously increases. In 2008, Indonesia’s coal production reached 215 million tonnes, or increased by 90.3% over 2003. Meanwhile, in 2009, Indonesia’s Coal Mining Association noted that Indonesia’s annual coal production was at 250 million tonnes. This amount had been forecasted to increase to 280 million tonnes in 2010. Most of Indonesia’s coal production is being exported to other countries, mainly: Japan, Taiwan, China and India.
Supported by enormous reserves (exceeding 10 billion tonnes), the Company plays a significant role in both the domestic and export markets. For that reason, the Company has prepared various strategic steps. The use of state-ofthe- art technology is one of the efficiency efforts and this will also increase production. To satisfy market demand, the Company has also set a production increment target to 111 million tonnes per annum, which is likely to be reached in 2012.
Expansion to China, India, or even domestic market, supported by the increment in sales volume, is the Company’s strategy to increase sales of coal, primarily thermal coal. In addition to relying on domestic market, the Company has also focused on marketing coal to Japan, China and Taiwan. As one of the strategies to increase customer service and satisfaction, the Company will attempt to shorten the delivery period. Moreover, companies will also supplement organic growth efforts by acquiring potentially promising coal mining companies.
In order to optimize corporate performance, the Company will constantly diversify its business portfolios by investing in mining other commodities, such as copper, gold, iron ore, lead, zinc and methane gas.
All of the above mentioned clearly need a strong commitment from all levels of management and staff. Thus, HR quality improvement becomes one initiative to stimulate business improvement. Corporate management, by ensuring a sound implementation of corporate governance principles as well as constantly considering aspects of risk, is a key to a business success. Benchmarking with national and international best practices, the Company will also implement appropriate GCG and Risk Management policies and programs. The adopted CSR policies will help the Company achieve sustainable business success.
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Corporate Info 
