Adaro Energy, one of Indonesia’s top miners, targets coke production from its subsidiary, Adaro MetCoal Companies (AMC) to reach 1 MnT this year to feed an expected surging demand from steel companies at home and abroad.
“As infrastructure development program in Indonesia continues, sales of AMC’s coking coal to the domestic market will be very potential in the future,” the company said in an email response to Steelmint’s question over the weekend.
Production from Adaro could help Indonesia’s domestic metal producers to source more coking coal from domestic sources. Due to limited domestic coking coal output, many Indonesian steel producers have to import coking coal from Australia, which is more costly due to shipping distance.
Jonatan Handojo, the founder of Indonesian Refining Industry Association (AP3i), said in an interview in June that many Indonesian nickel pig iron and steel smelters, which operates blast furnaces, have been idle because of rising coking coal prices.
In the first six months of this year, production from AMC climbed 37% to 0.62 Mt, from 0.45 Mt in the same period last year, the company said in its 1H 2018 report.
Maiden coking coal production has been done in Haju mine, which has output capacity of 1 MnT annually. The coking coal is shipped to barge loading point in Muara Tuhup in Barito River in South Kalimantan.
Adaro MetCoal groups seven coal companies which hold a coal contract of works for seven concessions in Central and East Kalimantan. Adaro bought all the companies from BHP Billiton in October 2016.
Currently, Adaro MetCoal sells its product to customers in Japan, Thailand, India, China, the Netherlands and to the domestic market.
Global demand for metallurgical coal is forecast to surge to 398 MnT by 2040, from 307 MnT this year, Adaro said in its presentation posted in its website, citing forecast from Wood Mackenzie.
Adaro has yet to have plans to ship coking coal from the newly acquired Kestrel coal mine in Australia to Indonesia, the company said, adding it will be able to release 2019 production plan for Kestrel after it finishes budgeting process. Kestrel produced 4.25 MnT of hard coking coal in 2017.
Last month, Adaro completed the acquisition of Rio Tinto’s 80% stake in the Kestrel coal mine. Upon completion of the deal, the mine, which has 146 MnT of saleable reserves and 241 MnT of reserve, is 80% owned by Kestrel Coal Resources. Adaro has 48% stake in Kestrel Coal Resources, while EMR holds the remaining 52%.
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