Adaro upbeat on coal export despite tight competition<\/p>\n
By Berni K. Moestafa<\/p>\n
BANJARMASIN, South Kalimantan (JP): PT Adaro Indonesia, one of
\nthe country's major coal producers, said demands for its coal
\nwould continue to increase despite growing competition in the
\nworld's coal market.<\/p>\n
Adaro general manager A.H. Chia said coal output would be
\nfurther increased to 20 million tons in 2001 from about 14
\nmillion this year to anticipate the estimated high demand.<\/p>\n
\"We expect that demands for our coal in Asian countries will
\nrise,\" Chia told journalists visiting Adaro's mining site here on
\nMonday.<\/p>\n
Chia said the increase in the Asian coal market was due to the
\neconomic recovery in the region.<\/p>\n
He cited the revival of the construction industry, which
\ntumbled during the economic crisis, caused cement producers to
\nincrease coal imports for their plants.<\/p>\n
Chia said an increasing awareness of using environmentally
\nfriendly coal in Asia would also benefit the company.<\/p>\n
Adaro's product \"Envirocoal\" contains only a moderate energy
\nlevel, but the company claimed it has the world's lowest sulfur
\nand ash content, resulting in environmentally friendly coal.<\/p>\n
Adaro's customers use Envirocoal as a blend with high heat
\nvalue coal to achieve local environmental standards of emission,
\nChia explained.<\/p>\n
However, clean coal was just a key to entering the market,
\nChia said, adding that Adaro could hardly rely on its moderate
\nheat value to find buyers.<\/p>\n
The company eyed European and American markets, where
\nlegislation limiting emissions from coal-fired power plants had
\ncreated a strong demand for clean coal.<\/p>\n
Spain has so far become Adaro's biggest market, importing 2.2
\nmillion tons for the country's Puentes 700 megawatt power plant.<\/p>\n
Even though Chia expected a drastic increase in Asian coal
\ndemand, he said the European market would only increase by about
\none percent.<\/p>\n
This year Adaro has sold 3.8 million tons of coal to Europe
\nwhile sales to Asian countries have contributed some 4.6 million
\nin exports, compared to only 2.9 million in 1998.<\/p>\n
About 68 percent of the company's 1999 sales -- which Adaro
\nestimated to reach some 14 million tons between US$18 and $20 per
\nton -- was sold to foreign markets.<\/p>\n
Chia said at present the company had exported coal to 15
\ncountries, including Spain, the Netherlands, Bulgaria, the United
\nStates, Chile, Taiwan and India.<\/p>\n
Adaro commissioner Soetaryo Sigit said its coal, which has a
\nhigh-moisture content, was not suitable for burning purposes, but
\nmost industrial companies bought it due to its low sulfur and ash
\ncontent.<\/p>\n
He said with such specifications power stations were able to
\navoid using expensive technology to meet local environmental
\nstandards, which otherwise would cost up to 20 percent of a power
\nplant investment.<\/p>\n
Another disadvantage, he added, was the location of Adaro's
\nthree coal mining deposits in the Paringin subdistrict, some 220
\nkilometers north of Banjarmasin.<\/p>\n
The company was forced to build a 75-kilometer road to the
\nBarito river from where coal vessels transport the coal to a bulk
\nterminal on Laut Island.<\/p>\n
Adaro currently operates the biggest open pit coal mine in
\nIndonesia, the Tutupan coal deposit, measuring some 3.5
\nkilometers in length and some 600 meters in width.<\/p>\n
Adaro senior chief of main planning Taufik Hidayat said the
\nTutupan coal deposit was estimated to hold some 700 million tons
\nof coal reserves.<\/p>\n
\"Tutupan will offer us about 30 years of continued work,\"
\nTaufik said.<\/p>\n
Meanwhile, Adaro spokesman Priyadi said the cancellation of a
\ncontract this year between state-owned PT PLN with one of Adaro's
\ncustomers, PT Paiton Energy Corporation, had not affected the
\ncompany's sales.<\/p>\n
\"Paiton constitutes only a small market of our sales,\" Priyadi
\nsaid, adding that the company focuses more on overseas markets.<\/p>\n
Paiton was slated to buy 580,000 tons of coal from Adaro this
\nyear before a dispute over Paiton's high electricity rates
\nresulted in a suspension of its contract with PLN.<\/p>\n
He said despite losing Paiton, the company was able to
\nincrease sales, which had allowed them to revise its 1999
\nprojected sales from 12 million tons to 14 million.<\/p>\n
Adaro's shareholders are Australian-based New Hope Corporation
\nLtd., which owns 50 percent, American-based Mission Energy, which
\nhas 10 percent, and the Indonesian Swabara Group with 40 percent.<\/p>\n
Chairman of the Tirtamas Group, Hashim Djojohadikusumo, and
\nchairman of the Raja Garuda Mas Group, Sukanto Tanoto, took over
\nthe Swabara Group from Australian-based Washington H. Soul
\nPattinson Ltd. on April 4, 1997.<\/p>",
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