Indonesia May Use Japan’s Floating Dock to Unlock Coal Mines
Indonesia, the world’s second-largest coal exporter, may build a floating dock worth as much as 100 billion yen ($1.2 billion) with Japan to enable speedier transfer of the fuel from barges to bigger ships.
Construction of the so-called mega-float, to be moored off the coast of East Kalimantan, is likely to start in 2014, said Hidenobu Teramura, a director at Japan’s trade ministry. The dock, longer than eight Airbus SAS A380 superjumbos, will be designed to cut the time taken to load a Panamax ship to one day from seven, Japan’s transport ministry said.
The project to build what would be the world’s biggest floating coal terminal is part of Japan’s goal to export infrastructure technology and revive a stagnating domestic economy, worsened by the March 11 earthquake and tsunami. Indonesia is looking to spur mining in Kalimantan, among its most resource-rich areas, where inadequate infrastructure is impeding development.
“That’s definitely one way to address Kalimantan’s infrastructure problems that have become a major concern for foreign and local investors,” Supriatna Suhala, executive director at the Indonesian Coal Mining Association, said in a telephone interview.
Coal will provide the bulk of the fuel for power generation in Southeast Asia, where demand for electricity may triple 2030, Wood Mackenzie Research Consultancy said May 12. Companies plan to build 35 gigawatts of coal-fired capacity in Indonesia, Malaysia, Thailand, Vietnam and Singapore, it said.
Indonesia and Japan will discuss the float project in Bali on May 30, Suhala said. President Susilo Bambang Yudhoyono vowed to double Indonesia’s infrastructure spending to $140 billion during his second five-year term to 2014 to achieve average growth of 6.6 percent.
Shallow waters around Kalimantan, the Indonesian side of Borneo Island, limit access to the largest coal carriers that are able to pass through the Panama Canal. The floating harbor will be placed in waters deep enough for the panamax ships to berth on one side and the barges to unload on the other.
The float, 600 meters (1,968 feet) long and 150 meters wide, will be able to accommodate two Panamax ships and stockpile 600,000 tons of coal, according to Japan’s transport ministry. There will be space to blend coal to customer specifications, potentially raising prices, Teramura said.
Coal may average $124 a ton this quarter and $127 in the third, Raymond Chan, an analyst with Standard Chartered in Singapore, forecast in a report on May 10. The Indonesian coal reference price was traded at $117.61 a metric ton in May, down from $122.02 a ton in April, according to data from the energy ministry. That’s in line with the $117.15 a ton spot price at Australia’s Newcastle port, a benchmark for Asia.
Indonesia produced 325 million tons of coal in 2010, including supply from PT Bumi Resources’ PT Kaltim Prima Coal and PT Adaro Energy’s Tutupan, among largest coal mines in Kalimantan. The region produces more than half the nation’s coal output.
Japan is seeking to attract overseas customers as an aging population, deflation and increased debt dimmed the outlook for the economy even before the earthquake and tsunami.
The timing coincides with a plan by Tokyo Electric Power Co. to use a mega-float at the crippled Fukushima Dai-Ichi nuclear plant to store radioactive water. The float, which served as a fishing park in Shizuoka, will be delivered to Tokyo Electric this month, the utility said on May 15.
“Mega-float technology, which has been developed by Japan Inc., is very important and expected to be a classic example of Japan’s infrastructure exports,” Teramura said.
Japan Coal Energy Center, known as J-Coal, is scheduled to complete the Indonesian mega-float study in the second half of the year, Teramura said. Japan may offer yen-loans to Indonesia for the project and the terms would stipulate that at least 30 percent of the materials used in the float would be made in Japan, giving Japanese companies such as IHI Corp. (7013), Mitsubishi Heavy Industries Ltd. (7011) and Nippon Steel Corp. (5401) an opportunity to win contracts.
IHI, Mitsubishi Heavy and some rival shipbuilders had jointly developed the mega-float technology in the 1990s, aiming to create a floating airport in Japan as a cheaper alternative to a landfill project. In 1999, the group built a prototype runway off Yokosuka, near Tokyo, and ran trials until 2000 before bidding for a 2,500-meter fourth runway at Tokyo’s Haneda airport, the single biggest public works contract in Japan.
The companies had to withdraw from the bidding after failing to meet a government condition of having building companies in the group. A group of construction companies, led by Kajima Corp. (1812), won the order.
To contact the editor responsible for this story: Andrew Hobbs in Sydney at email@example.com