Indonesia has 5.9 billion short tons of recoverable Coal reserves, of which 58.6% is lignite, 26.6% is sub-bituminous, 14.4% is bituminous, and 0.4% anthracite. Sumatra contains roughly two-thirds of Indonesias total coal reserves, with the balance located in Kalimantan, West Java, and Sulawesi. According to U.S. Embassy reports, Indonesia produced 132 million short tons of coal in 2003, up 16% from 2002. More than three-quarters of the countrys coal production is exported, primarily to Japan and Taiwan, but also South Korea, the Philippines and Hong Kong. With coal exports from China declining over the last two years, Indonesia is now the worlds second-largest coal exporter.
Indonesia plans to double coal production over the next five years, mostly for export to other countries in East Asia and India. The new capacity will come primarily from private mines. The Clough Group of Australia was awarded a $215 million contract for improvements at the Indonesian firm GBPs Kutai mine in East Kalimatan. Another foreign firm with major interests in Indonesian coal mining is Australias Broken Hill Proprietary (BHP).
July, 2003 saw the divestment of Australian mining company Rio Tinto and BP from their joint venture in Kaltim Pima Coal (KPC).The shares were sold to Indonesian firm, PT Bumi Resources for $500 million. According to several reports, the divestment was prolonged and acrimonious as the government objected to Rio Tintos divestment plan, and threatened to mobilize public action to block the mines operations. Ultimately, Rio Tinto and partner BP sold their combined 100% stake for about half of its assessed value.