Indonesia ready to provide more coal to Japan-association

Indonesia, the world's largest exporter of thermal coal, stands ready to provide additional coal to Japan to meet an expected surge in demand, said an official at the Indonesian Coal Mining Association on Tuesday. 

Japan faces a potential catastrophe after a quake-crippled nuclear power plant exploded and sent low levels of radiation floating towards Tokyo. 

Japan's coal-fired generators are already working close to capacity and can't boost output or imports to make up for lost nuclear power after Friday's earthquake. 

But as Japan struggles to fill that gap, its additional demand for coal is likely to be limited to 5-10 million tonnes over the rest of the year -- about 4 to 8 percent of total annual demand. 

"We are ready to provide additional coal to Japan to meet the expected surge in coal use following the shutdown of the country's nuclear power plants," said Kaz Tanaka, vice chairman of the Indonesian Coal Mining Association in an emailed statement. 

He did not say how much spare production Indonesian producers have. 

Indonesia ships more than 70 percent of coal to the Asian market, with Japan the top buyer. But Japan prefers to source more from Australia because of the consistency of Australia's coal quality.

Traders said there may not be a surge in coal demand from Japan in the short-term as many industrial and residential consumers had been damaged by the tsunami which would cap demand for electricity. 

But in the long-term, Japan's coal demand may increase as nuclear power plants damaged by the earthquake may not restart anytime soon, said one trader.     Most Indonesian producers also had limited cargoes to meet short-term demand as producers normally have contracted their production until the first quarter of the year, but it may be able to fill the gap for the long-term, traders said. 

PT Bumi Resources , Asia's top thermal coal exporter, sees coal prices and demand going up in the medium term after the earthquake of Friday, Dileep Srivastava, a company director, said on Monday. 

    Industry officials have said Indonesia expects to produce 340 million tonnes of coal this year, up from an estimated 310 million tonnes in 2010 as miners ramp up production on higher prices. Source: Reuters