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Coal Exports to India to Rise 23%
Reva Sasistiya | September 08, 2009

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Indonesia, the world’s largest exporter of thermal coal, agreed over the weekend to increase shipments to India by 23 percent to 16 million tons this year, with increased deliveries to start in the two months, the Energy Ministry said on Tuesday.

“Our exports to India will gradually increase,” Minister Purnomo Yusgiantoro told reporters on Tuesday after returning from India, where he had met with the nation’s Steel Ministry.

Purnomo said prices for the coal shipments would be determined by the international market. Thermal coal was priced at $66.30 per ton in Newcastle on Tuesday.

Indonesia exported 13 million tons of coal to the Asian giant last year. With demand for coal to fuel steel and power plants dramatically increasing, India is seeking an additional 50 million tons a year from international sources.

Purnomo said that despite the rising exports, the government’s priority was ensuring enough coal to fulfill domestic demand.

The nation produces about 230 million tons coal annually with 40 percent allocated for local consumption.

The deal was reached when Purnomo met with India’s steel minister, Virbhadra Singh, over the weekend.

The two nations agreed to form a joint working group to facilitate India’s plan to acquire coal assets through its state-run International Coal Ventures in Indonesia. A memorandum of understanding is to be signed in October.

Expecting a recovery in demand, the Energy Ministry has raised next year’s coal production goal to 250 million tons, up 13 percent from the 2009 target.

Production is already well behind the ministry’s goal of 230 million tons this year, with first-half output of 72 million tons, just 31.3 percent of the year target.

In another agreement reached over the weekend, India’s Bharat Earth Movers will invest $200 million for a plant in Indonesia to manufacture surface-mining and other heavy equipment, Purnomo said.