Indonesia is blessed with readily available coal reserves and resources which exist primarily in Sumatera and Kalimantan islands. Indonesian coal generally has medium calorific values (CV of 5,000 – 7,000 kcal/kg), with relatively high percentages of volatile matter. The coal has low ash and sulphur content, making it some of the cleanest coal in the world and thus a more environmentally-friendly solution or blending material for coal-fired power plants.
Due to the geological structure and the archipelago nature of the country, coal deposits tend to be close to the surface with thick seams making it possible to use open-mining techniques with low stripping ratios. In addition, rivers and seas are readily accessible for transportation to transshipment points or coal terminals.
The biggest market for coal is Asia, which according to the World Energy Council currently accounts for 56% of global coal consumption with China and India making up for the majority of the demand. Due to its closer geographical proximity to these two markets, Indonesia has a significant competitive advantage over other major coal-exporting continents. Freight costs are lower and/or smaller vessels can be used (and are more readily available) to deliver from Indonesia to Asian countries. On average, it takes one to two weeks less to ship to China and India from Indonesia than it does from Australia, its closest competitor by geography. According to Platts, savings of up tp US$5-10 per tonne can be made taking delivery from Indonesia.