India’s Coal Shift Worries Indonesia’s Coal Miners

Jakarta: For many coal miners in Indonesia’s resource-dependent economy, a surprise shift in India’s coal industry — from big importer to potential exporter — could not have come at a worse time.

Prices have slumped over the past five years and a slowing China is buying less. Now, Indonesia faces an Indian double whammy: not only is its main export market producing so much coal that it aims to wind down imports in two years, it's also set to start exporting for the first time — to a market dominated by Indonesia.

State-run Coal India (COAL.NS) is opening mines at the rate of one a month and expanding existing ones, as Prime Minister Narendra Modi fast-tracks environmental clearances to double output this decade and meet election promises to provide power to a population of 1.3 billion.

That dash for production has left Coal India with a stockpile of more than 50 million tonnes of mined coal, but domestic demand is rising more slowly than anticipated, prompting it to start talks to export to neighbouring Bangladesh.

Not so long ago, Indonesian coal executives brushed aside concerns about slowing sales to China, citing strong Indian demand — suggesting they have underestimated India's ability to quickly ramp up production.

“This is a threat to the Indonesian coal industry” said Supriatna Suhala, executive director of the Indonesian Coal Mining Association (ICMA). “In future, we may have to compete with India. They may become an exporter to Asia.”