WORLD AND INDONESIAN COAL

Ekawan
Rudianto
EMP

Contents
1. Coal as an energy
2. Reserves, Production, Consumption &

trade
3. Coal and environment
4. The future of coal
5. Coal in Indonesia

Coal as an energy
Energy consumption growth will
track economic growth

It will grow 2%/a to 2030

Fossil fuels contribute to 87% (86%

in 2030) of energy
Oil : 39% (33%) (-)
Gas : 24% (26%) (++)
Coal : 24% (27%) (+)
Nuclear : 6% (6%)
Growth :OECD vs Non-OECD
Asia (++)

1 BTU = 1.55 KJ = 0.252 kcal ; Quadrillion = 10^15

Coal as an energy

Coal is used for electricity generation

World electricity :
14,780 (2003) to 30,116 bil. KWh (2030)
Growth : 2.7%/a (3.9% vs 1.5%)
Mainly for industrial (vis a vis Residential or
transport)
Fossil fuels contribute to 77% (80% in 2030) of
electricity demand
Oil : 10% (7%) (-)
Gas : 27% (33%) (++)
Coal : 40% (40%) (=)
Nuclear : 6% (6%)
Coal-fired from 1119 (2003) to 1997 GW (2030)
or 0.3%/a

Coal as a primary energy

share

Important energy in
Revolution Industry
Until 1960s coal was
the most important
source
Late 1960s
overtaken by oil
Forecasted, coal
could become major
energy sources

COAL :
Reserves, Production and
Consumption and Market

Resources and Reserve (1)

Coal deposits

Resources and Reserve (2)

Reserves (Gt)
Resources abundance (6,000 Gt),
100 countries
70% North-equator (US, CIS,
China)
Reserves 984 Gt in 2003
Antracite & bituminous: 52%
Sub-bituminous : 28%
Lignite : 20%
190 years accessible reserves in
current production level
+ Exploration
+ Technologies
+ Economic
- Transport
- Qualities
- Deep mines
Sources : WCI,2001; BP-statistic,2003

Reserves and mining

levels not always match
Case CIS
- distance
- ample oil and gas
Case PR China
- high domestic demand
- slow development oil
(1.3%; 12 yr) and gas
(1.3%; 47 yr)

Case Indonesia (1%;3%)

- high export demand
- need fresh money

Resources and Reserve (3)

Exploitation life (R/P)

Resources and
Reserve of Oil

Resources and Reserve

of Gas

Coal Fact (1)

Source : WCI,2006

Coal Production (1)

Increase steadly 1.5%/p.a

Growth : steam > coking
Increase :
China, Australia,
Indonesia, Colombia

Decline :
Western Europe
Poland

Coal Production (2)

First players :
1. Oil company
(Exxon & Shell)
TOTAL
2. State owned
CdF, NCB
PT BA
Present : MNC (BHP, Anglo, Rio
Tinto, Glencore/Xstrata)
Consolidation process:
BHP-Billion (2001)
Bumi resources (2004)
Glencore/Xstrata (2003)
400 export mines,120 producers
10 biggest companies share 21%
production & 32% of world trade

Coal Consumption (1)

Grew from 2780 Mt (1980) to
4600 Mt (2004)
Steam 2235 to 4100 Mt
Coking 545 to 550 Mt

Most is used in the proximity

(83.5%)
Shift from Europe to Asia
(Chinas factor 626 to 1 700 Mt)
Shift from heat market to power
plants
Most steam coal goes to power
plants

Many countries depend on coal to

power their energy (& as base
load)

Coal Consumption (2)

International
trade (Mt)
Started in the middle 19th ;
expand 1979/80 (steam
increase ; coking stable)
Growth :
demand energy & raw mat
cover uneconomic mined

775 Mt coal trade in 2005

cross-border 70 Mt ; maritime
: 685 Mt
16.5 % production
steam 505 Mt ; coking 180 Mt

Australia, 1er exporter:

231 Mt in 2005

Japan, 1er importer:

178 Mt in 2005
Sources : WCI,2001;BP-statistic,2002

International trade (Mt)

Pacific Market (397 Mt)
Steam : 274 Mt
Coking : 123 Mt

Atlantic Market (277 Mt)

Steam : 210 Mt
Coking : 67 Mt

Supply
245 Mt
Colombia
222 Mt South Africa
Rusia
Poland
Venezuela
US etc

Supply
429 Mt
Australia
Indonesia
China
Rusia
Vietnam

55 Mt

Demand
397 Mt
Japan
374 Mt South Korea
Taiwan
India
China
etc
23 Mt

Price Formation
Market Leader
South Africa
Colombia
Russia
Marginal Supplier
Poland
US
Australia
Indonesia

FOB Prices
Freight Rates
Currency relations
Buyers market
Sellers market

Pacific (59% ; +)
Atlantic (41% ; -)

Diff. Consumers
Diff. Supplier

World Seaborne Coal Market (674 Mt)

Steam : 484 Mt
Coking : 190 Mt
Demand
277 Mt
Western Europe
Eastern Europe
Mediterranean
North,Central &
South America

Diff. Coal market (for steam)

due to freight cost (distance)

Market Leader
Australia
Indonesia
Marginal Supplier
South Africa
Russia
China
US

Diff. market mechanicsm

Coal Market

transport maritime cost

Factors :
Distances
Fleets availability
Other raw material
(iron ore, grains,
etc)
(position of fleet)

Coal Market
International trade
Players :
- dealers (active in early 80s ; no more)
- producers vs consumers (Glencore, Anglo, BHP..)
- champion (case : Sogo Shosho)
- trading house as agent for producers (active 00s ; RAG, RWE, EDF..)

Contract nature
-long-term
(T : < 10 yr ; Q : fixed ; P : yearly based on reference price; long-term relationship;
big supplier; JSM or Utilities base load or near-mine power plant)
-spot contract
(T & Q : ~ ; P : spot/Indexes ; liberalization electricity, excess supply & devlp. coal
chain; no permanent relationships & less security of supply; smaller supplier;
KEPCO, Taipower ; different reason between Atlantic (70%) & Pacific (30%+))
- tender
(bidding process ; deal through trader ; larger volume than spot ; multiple cargo for
several quarter ; big buyer/state owned ; high transaction cost ; no permanent
relationships ; Shenhua for KEPCO)

Coal Market
International trade
Price setting
-contract price
Relate to long-term transaction (tonnage; quality ; exchange rate ..) ; fixed price
for each current year ; settled directly buyer & seller
- spot price
Price (& Q) depends market situation ; reference : indexes globalCoal ; BJI ;
MCIS
- benchmark-price (only in Pacific)
Price settlement JSM vs Australias sellers as a basis for others electric utilities
-Future price
- offered by commodity markets for spot quantity; price agree in advance ; uses
index (that specify provenance, quality, place of delivery etc) PRB 8000, NYMEX
Coal Index ; Physical trade vs Coal derivatives (swaps, future, option)

Coal Price Indexes

60
55

$/tce

50
45
40
35
30
25
1Q1992 1Q1993 1Q1994 1Q1995 1Q1996 1Q1997 1Q1998 1Q1999 1Q2000 1Q2001 1Q2002
CWI

SACR

MCIS

EU-index

Indonesian Coal Index

To determine Indonesias coal export price

reference is by using the price index of among
others Australian (Barlow Jonker), Global, Platt,
Argus, McCloskeys, and Japanese Benchmarking

ICI-3

ICI-1

ICI-2

ICI Specification

ICI-1

ICI-2

ICI-3

Caloric value (kcal/kg)

6500

5800

5000

Sulfur content

Up to 1%

Up to 0,8%

Up to 0,6%

Ash

Up to 2%

Up to 10%

Up to 8%

Total moisture

Up to 12%

Up to 18%

Up to 30%

Basis

GAR

GAR

GAR

Size

Panamax

Panamax

Panamax

Timing

in 90 days

in 90 days

in 90 days

Methodology ICI (1)

Membership in the Coalindo ICI Panelist : 23 members; 9

personnel from coal Producers, 9 personnel from coal
consumers and 5 from supporting members.
Coal Price is Weekly. The Coalindo ICI Panelist
members have to fulfill the Form and furnish.
The price of evaluated coal is every Friday at 17:00
Jakarta Time at the latest.
The end product is the price "reference" of Indonesia's
coal in markets at home as well as abroad with the brand
"Argus/Coalindo ICI.

Methodology ICI (2)

Coal as a primary energy share

 Prices
Prices of energy
product
Transport cost
Excess capacity
Others (congestion
etc)

Coal utilisations (1)

Electricity, Metallurgy,
Cement, heating,
Utilisations des charbons en 1998

23.5 % of primary energy in

2000
62% : electricity
16% : steel industry

Some countries are

dependent on coal for their
electricity :

Poland(96%), South
Africa (90%), China (81%),
India (75%), , USA(56%)

Some countries are

dependent on coal for their
domestic consumption :
China, USA
Source : WCI,2001;EIA,2001

Monde: Energie primaire par source (Mtoe)

Coal utilisations(2)
electricity generation
Coal utilisation
Electricity : 73%
Steel : 12%
Cement et heating : 15%

Structure of electricity
production in Europe :

Nuclear : 35%
Coal : 30%
Natural gas : 13%
Oil : 7 %
others : 15 %

Several countries are heavily

dependent on coal for their
electricity generation :

Germany (50%), Greece

(70%), Poland (90%), Czech
(75%)

EU 15
Germany
France
Belgium
Italy
UK
Greece
Spain
Poland
Czech Republic
Hungary
Rumania
Bulgaria

10
Coal

20

30
Oil

40
Gas

50

60
Nuclear

70

80

90 100

Other (hydro)

Electricity generation from coal

Pulverized coal is blown into the combustion chamber of boiler;
The hot gases (1400) convert water into high pressure steam;
The steam rotate the turbine shaft at high speed, and is condensed and
returned to boiler
Thermal efficiency?
Electricity is generated when turbine shafts rotated in a magnetic field

Coke and steel

10% of coal use for steel
industry
Coke+limestone+iron ore
are fed to blast furnace
Hot air blast ( pulverised
coal or gas or fuel) are
injected into the base of
furnace
630 kg of coal pertonne of
steel
500 kg of coking coal
130 kg of steaming coal

Source:WCI,2001

Coke
Coking coal
Certain physical properties
low sulphur
low phosphorous
Cokefaction in coke oven
Size 3 mm
1200C
20 h
Volatile contents are driven
off as gas
Red-hot product is cooled
and screen (>30 mm) as
coke
Coke+limestone+iron ore are fed
to blast furnace to produce steel

Coal advantages
Within 20 years, coal prices
were slightly decline

Steam coal prices (CIF, US Dollars/tonne)

technology
economic of scale
freight

Low cost energy sources

Coal: 2 $/GJ
Oil : 4 $/GJ

Security of supply
No production
concentration

Safe to be transported

Source : WCI,2001;EIA,2002

Spot oil proces (US Dollars/barrel)

Coal
&
Environment

Coal and environment (1)

Stage
Mining
- Un d ergrou n d

- Surface

Ben eficiation

T ran sp ortation
Com bu stion
- By p rod u ct

- Em ission

Main Impacts
Subsiden ce
Gen eration of gases (m ainly CH 4)
Liqu id effluen t/Acid Mine Drainage
H yd rologic imp act
H ealth effect of m iner: resp iratory d iseases (e.q.
p n eu m ocon iosis or silicosis) cau sed by d u st
Surface d istu rban ce (e.q. ch an ged of n atu ral lan d su rface)
Liqu id efflu en t/Acid Mine Drainage
H yd rologic imp act
Solid waste
Water con tam ination from p rep aration p lan ts
Air con tam ination from p rep aration p lan ts
Refu se con tam ination from p rep aration p lan ts
Dep en d on typ es of tran sp ort, m ainly air p ollu tion (d u st), an d
su rface d istu rban ce
Fossil fu el com bu stion waste :
fly ash , bottom ash , boiler slag, Flue Gas Desu lph u ration
m aterial
Sulfu r Oxides
Nitrogen Oxides
Particu late m atter
Carbon m on oxide
T race elem en ts (p oten tially toxic):
ch rom ium , arsen ic, lead , cad m ium etc
Green h ou se Gases: i.e Carbon Dioxide

Coal and environment (2)

Core
Element

Environmental
Challenges

Technology Response

Status

Particu late
emission s

- Activated carbon Injection ; Electrostatic Precipitators; Fabric Filters

- T echn ologies have removal efficien cies of over 99%.

T echn ologies d evelop ed , commercialized an d widely ap p lied

both in d evelop ed an d d evelop in g cou n tries.

NOx emission

- Flue Gas Desulphurisation ; Integrated Gasification Combined Cycle ;

Selective Catalytic Reduction
- Over 90% of NOx emission s can be removed by treatin g the NOx in
the flu e gas.

T echn ologies d evelop ed , commercialized an d widely ap p lied

in d evelop ed cou n tries.

Technology
for reducing
emissions of
pollutants

SOx emission

Efficient
Combustion
Technologies

CO2 emission

- Pulverised Coal Combustion (PF) ; Fluidised Bed Combustion (FBC);

Integrated Gasification Combined Cycle (IGCC); Pressurised Pulverised Coal
Combustion; Supercritical Pulverised Fuel (S. PF)
- In the short to med iu m term, substan tial red u ction s in CO2 p er
megawatt hou r of electricity p rod u ced can be achieved by in creased
combu stion efficien cy (megawatt hou rs p er ton n e of coal con sumed ).

Reduction
CO2
Emission

CO2 emission

- Carbon Capture (pre-combustion; oxyfuel combustion; post-combustion

capture) ; Carbon Storage (geological reservoir, saline aquifer); liquifaction;
gasification
- Zero-emission s techn ologies to en able the sep aration an d cap tu re of
an d its p erman en t storage in the geological subsurface;

Combu stion
waste

- Flue Gas Desulphurisation ; Wet Particle Scrubers ; Coal benefiation ;

Integrated Gasification Combined Cycle
- Emission s can be red u ced by over 90% an d in some in stan ces by over
95%.
- Coal benefiation (cleaning)
- Red u ces waste, SOx emission s an d in creases thermal efficien cies. It
can be rep rocessed in to con stru ction materials (e.g. fly ash in cemen t
makin g)

T he ap p lication of NOx con trol techn iqu es is less p revalen t in

d evelop in g cou n tries.
T echn ologies d evelop ed , commercialized an d widely ap p lied
in d evelop ed cou n tries.
T he ap p lication of d esulp hu risation techn iqu es is less
p revalen t in d evelop in g cou n tries
T echn ology d evelop ed , commercialized an d widely ap p lied
both in d evelop ed an d d evelop in g cou n tries

T echn ologies d evelop ed , commercialized an d ap p lied in some

d evelop ed an d d evelop in g cou n tries.
Average thermal efficien cy in OECD is 38% an d in d evelop in g
cou n tries is 30%. Cu rren t n ew techn ology can achieve 45% of
efficien cy
T ech. PF coal : p roven to be excellen t; commercially
T ech. S. PF an d FBC: p roven to be good ; commercially
T ech. IGCC : n ot yet p roven , d emon stration stage
T echn ologies have been d evelop ed beyon d the stage of
techn ical feasibility, even thou gh still n ot yet commercialized
Researchers are p lan n in g to imp rove these comp on en t
techn ologies an d d emon strate them in in tegrated
con figu ration s. Dep loymen t may start within a d ecad e.

Coal and environment (3)

Greenhouse effect

A natural phenomenon caused

by GHG (water vapour, CO2,
CH4,) absorb some solar
radiation and reflect it to earths
surface
Exploitation and combustion of
fossil fuels may emit GHG into
the Atmosphere and increase
their quantity up there.
Exploitation and combustion of
coal contribute to 37% of CO2
emission
Source :WCI,2001, IEA, 2001

Coal and environment (4)

Tonnes of carbon per million
tones of oil equivalent

Tonnes of carbon
per GJ

Natural gas

0.61

0.0138

Crude oil

0.84

0.0190

Bituminous coals

1.09

0.0245

Antrachites

1.14

0.0155

Gasoline

0.80

0.0180

Kerosine

0.82

0.0185

Diesel/gas oil

0.84

0.019

Fuels oils

0.88

0.10

Oil Products

Coal and environment (5)

What is the Kyoto Protocol ?
an engagement that almost 180 countries signed in Kyoto, Japan, in 1997
38 industrial countries have to reduce their emissions of green house
gases within 2008 and 2012 in the level of 5,2 % less than those in 1990

green house gases (CO2, NO2, CH4, SF6, PFCs, HFCs) are some gases
that are emitted from the burning and utilisations of fossil fuels, like coal,
oil, and natural gas
the scientists predict that the increasing quantity of GHG in the
atmosphere may produce a global warming phenomena
the Kyoto Protocols mechanisms :
Emission Trading
Joint Implementation
Clean Development Mechanism

Coal and environment (5)

The Kyoto Protocol in Europe

CCT in Europe
Strategy I :
promote the
technology for the eco-friendly
combustion for reducing emissions
of dust, NOx and CO2

Strategy II : improvement of
power-station efficiency.

Strategy III : low-to-zero CO2

coal-fired power plant.
- develop CO2 capture and storage
tech
- develop zero-CO2 power plants :
post-combustion technology with
CO2 scrubbing; IGCC technology
with integrated CO2 capture;

Clean coal technology (1)

Clean Coal Technologies (CCT) are technologies designed to

enhance both efficiency and environmental acceptability of
coal extraction, preparation and use.
CCT reduce emissions, reduce waste, and increased the
amount of energy gained from each tonne of coal
Several technologies are already viable and others under
development:
Flue gas desulphurisation (FGD), can remove 90-95% of
the oxides of sulphur from flue gases
Fluidised Bed Combustion (FBC), produce less NOx and
SOx
Integrated Gasification Combined Cycle (IGCC), produce
less solid waste and lower emissions of Sox, NOx, and
CO2. Over 99% of the sulphur present in coal can be
recovered for sale as chemically pure sulphur

Clean coal technology (2)

Exploration :
Geophysics (seismic) to reduce geological uncertainty

Exploitation :

Extraction : mechanization, recovery, security,

Back filling methods can reduce environmental problems
Improvement of security conditions and health for increasing acceptability
Capture methane for improve the exploitation and increase energy recovery

Processing :
Reduce impurities (ash, sulphur,,)
Improve the quality of mine waste water

Combustion :
Improve recovery

Sequestration and storage

Reduce waste

Source : WCI,2001

Clean coal technology (3)

Reduce emissions :

Electrostatic filtration removes 99%

of fly ash
Flue gas desulphurisation methods
remove 90-97% of SOx
Fluidised bed combustion produce
less Nox and SOx
.
LIQUIFACTION & GASIFICATION

Increase thermal efficiency

USA : 35%

OECD : 38%

Chine : 28%
Source : WCI,2001

Clean coal technology (4)

Clean coal technology (5)

Gasification and IGCC

Clean coal technology (6)

CO2 Capture (15-40 $/t):

Pre-combustion

Post-combustion

Oxyfuel
hydrogen
Rotating absorber
Membranes contactor

Storing CO2 (10$/t)

Ocean storage
geological

Enhanced oil Recovery

Enhanced Coal Bed
Methane
Depleted gas reservoirs
Saline aquifers
.

Activity
CO2 capture
CO2 transportation
CO2 injection
Total

Cost (USD/t CO2)

5 to 50 (current)
5 to 30 (future)
2 to 20
2 to 50
40 to 100

Clean coal technology (7)

IN
THE
LONG
TERM
.

Clean coal technology (9)

The Future of Coal

Energy Consumption in Future

Energy Consumption in Future

Coal in Future

Coal in Future

World production (demand) grows by 1.4%/an or

by 2,359 mt (51%) from 2000-2030
China contributes 45%; India, Australia, US,
Canada, Indonesia take the rest
The EU15 is the only region to decline

Drivers of growth :

Electricity demand (higher rate)

Iron and steel sector (slower rate)

Coal-fired additional capacity for 2001-30 is
1,400 GW of the 4,700 GW total additional
capacity

Coal in Future

World trade grows by 1.7%/an or by 414

mt (65%) from 2000-2030
East Asia and Korea drive 60% of the
trade growth

Asian demand benefits from exporters :

Australia, Indonesia, China
Total investment takes $ 398 billion, incl.
mining (88%), port, shipping
OECD ($ 132 b), China ($ 123 b)

Coal in Future

15

27

23

18
39
26
43

98
29
19

28

406 Mtoe (637 Mt)

Coal in Future

18
15

22
71
32

57

17

53
61

19

20
20

44

627 Mtoe (1,051 Mt)

28

123

26

103

COAL IN INDONESIA

Indonesia
Coal Resources and Reserves
No
1
2
3
4
5

Island

Reserve

Java
Sumatra
Kalimantan
Sulawesi
Papua

2735,32
4246,24
0,06
6981,62

In Million tonnes

Measured
2755,38
9689,84
21,20

Resources
Indicated Inferred Hypothetic
14,65
20046,87
4555,13
34,34
486,69
19494,09
498,46
112,79
138,30

Total
14,65
27391,72
30169,08
133,99
138,30
57847,74

C
O
A
L
R
E
S
O
U
R
C
E
S

Indonesia
Coal Production & Consumption

Production

Consumption

02

20

00
20

98
19

96
19

94

19

92
19

90
19

88
19

86

19

84
19

82
19

80

140.00
120.00
100.00
80.00
60.00
40.00
20.00
0.00
19

million tonnes

INDONESIA

COAL FROM INDONESIA

Korea

Japan

China
Taiwan
Hongkong

India

Thailand
Philipines
Malaysia

kilometers

2000

Australia