This presentation compares the costs of locating facilities for drying Indonesian thermal coals with CVs under 4200 kcal/kg, gar and TMs of 38% or higher, commonly referred to as low rank coals. By 2008, Indonesia was transitioning from being a supplier of sub-bituminous (sub-bit) coals, having typical CVs of 5000 kcal/kg and typical TMs of 24% to 28%, to a supplier of low rank coals. Operating coal-fired power plants (CFPPs) in the region were at that time designed to accept either sub-bit or bituminous coals. Power plant owners were concerned that they would need to derate their CFPPs if forced to fire on 100% low rank coals. In this presentation, I compare the costs and benefits of drying low rank coals at a hypothetical ‘CFPP’ site against the costs of doing so at an Indonesian coal mine site on Kalimantan. I conclude the presentation with a summary of coal drying technologies available in 2008. By 2015, neither option had gained traction in Asia due to the technical or commercial failures of coal drying demonstration projects at coal mine sites to meet their technical performance objectives.

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This presentation provides an in-depth review of the competitive strengths and weaknesses of the Indonesian and Australian thermal coal industries as of May 2010. It was based on a working paper published in 2010 through Stanford University’s Program on Energy and Sustainable Development. It reviews typical coal qualities offered by both industries, uncertainties created by Indonesia’s ongoing transition to low rank coals, and the increasing threat of overbearing government regulations on the coal industries of both Indonesia and Australia. Finally, it discusses the various competitive advantages that Indonesian coal producers hold over Australian coal producers, i.e., shorter sea transport distances to major regional coal markets and the opportunity to use offshore coal loading facilities rather than land-based coal loading ports.

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