Over the past two decades, Indonesia's coal
industry has transformed itself from being an unknown, minor player in Asia's
coal markets to the world's largest exporter of steam coal. In what is likely
the most detailed analysis of the Indonesian coal industry ever released, Dr.
Bart Lucarelli tells the story of how Indonesia created this world-scale
industry over two decades despite challenges created by widespread government
corruption, a weak legal system, the Asian Financial Crisis of 1997, and the
fall of the Soeharto government in 1998.
The paper argues that key physical and
technical factors, along with regulatory and political factors, have acted as
the primary drivers of the industry's phenomenal growth over the past two
decades and will be the most important factors for consideration over the next
two decades. It also discusses current
estimates of Indonesia's coal resources and reserves, the role played by
location and geological factors in the development of its coal resources, the
future impacts of the passage of Indonesia's Mining Law of 2009 and its related
implementing regulations, and how these issues might affect the coal industry's
structure and performance before 2020.