Indonesia may run out of coal in under 20 years

A new PricewaterhouseCoopers report states Indonesia may exhaust its economic coal reserves by 2033.

The country was the fourth largest producer of coal, according to the US Energy Information Agency, just ahead of Australia, producing around 488.6 million tonnes of coal (as of 2013) compared to Australia’s 409.6 million tonnes.

Although more recent data from the World Coal Association showed that these positions have since switched, with Indonesia falling to fifth position as it produced 471 million tonnes in 2014, compared to Australia's 491 million tonnes in the same year.

However its production levels have slipped as the coal price weakens and miners slash operational costs.

In the wake of this, a new PwC study has shown that economically retrievable reserves may be exhausted within the next 17 years, as the country fails to carry out exploration, according to Reuters.

"Exploration to find new coal reserves has pretty well stopped," PwC Indonesian advisory chief Mirzaq Diran said.

The study was based on the top 25 coal miners in the country, which account for around 80 per cent of the nation’s production.

While Indonesian government data indicated coal reserves of around 32.3 billion as of 2014, shrinking profitability and shrinking operational levels are believed to have dropped this level by 30 to 40 per cent, with Diran stating the survey outlined coal reserves of only between 7.3 and 8.3 billion tonnes, pointing to the coal’s stripping completely between 2033 aqnd 2036.

"There is a possibility that national coal reserves … will not be enough to supply 20 gigawatts of power stations for 25-35 years," Diran said.

He went on to state that company spending, which has already fallen by 80 per cent since 2012, may fall another 10 to 20 per cent this year.

To keep up to date with Australian Mining, subscribe to our free email newsletters delivered straight to your inbox. Click here.