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Asia’s Growth to Keep Coal in Demand
November 13, 2011

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Coal is set to remain a major energy source alongside oil over the next 25 years on strong Asian demand, an uncertain outlook for nuclear power and despite the popularity of natural gas.

Coal companies in Indonesia, the source of about 30 percent of global thermal exports, have experienced a boom in earnings in recent times. But for overall coal production, which includes coking coal, Indonesia sits in fourth place after China, the United States and India.

Aburizal Bakrie, head of the Bakrie family business, which includes coal mining, plantations, infrastructure and property, is among the tycoons benefiting from the coal boom. Among the other beneficiaries are several entrepreneurs who appear prominently in the Globe Asia rich list: Dato Low Tuck Kwong of Bayan Resources; Samin Tan of Borneo Lumbung Energy & Metals and Kiki Barki of Tanito Harum Energy.

“Coal will be very competitive for a long time,” Richard Jones, deputy executive director of the International Energy Agency said as the organization published its 25-year outlook.

“Coal will remain the main energy in many countries, principally China and India,” he said. “ By 2020, when it comes to coal imports, India will be a new China as the largest importer of coal in the world.” China is currently also the world’s biggest consumer of the fossil fuel.

Companies in China and India are snapping up the world’s coal assets to generate power, in particular electricity, to fuel the countries’ fast-growing economies.

Meanwhile, new technologies helping to make coal a cleaner form of energy, and an expected decline in the use of nuclear power across developed nations after Japan’s recent disaster, is set to boost demand for the mined fuel.

Germany recently announced that it plans to phase out nuclear energy by 2022 in the wake of the disaster at Japan’s Fukushima plant in March.

“The immediate impact of the decision in Germany is to import more electricity from their neighbors, and a lot of this imported electricity is coal-fired,” Jones said.

World coal production stood at 4.928 billion tons in 2009, providing around a quarter of the globe’s total energy output, according to the IEA.

“The world... coal market is perceived as structurally tight by many,” Societe Generale analyst Emmanuel Fages said.

He added that coal-hungry nations would continue to depend on the United States — the world’s second biggest producer of coal after China — to boost supplies. 

AFP, JG