Ranjeet Sundher, President, Challenger Deep Resources says Reuters Recorder reported thermal coal output in the world’s top exporter, Indonesia, expected to rise 8.3% in 2012 as miners increase production to take advantage of strong prices. Bob Kamandanu chairman of the Indonesian Coal Mining Association said that Indonesia’s thermal coal production will be 390 Mt in 2012 versus 360 Mt in 2011. He had previously estimated 2011 coal output at 354 Mt, up from 320 Mt in 2010. Meanwhile, Australian thermal coal on the globalCOAL Newcastle index, the benchmark for Asian coal, closed at A$116.55/t on March 2 2012.

Weaker demand has kept a lid on thermal coal prices in recent months, after prices plummeted from a high of over $125/t (US) seen in the first quarter of 2011. Most Indonesian coal is mined in East Kalimantan, Central Kalimantan, South Kalimantan and South Sumatra. The archipelago of 17,000 Islands produces mainly low grade coal, used predominantly in emerging markets, with top importers being China, India and South Korea.

Both India and China have launched aggressive and ambitious plans to ramp up power supplies in the coming years.

Challenger has established its Tabang project area in Indonesia with the intention of blending coal from multiple properties to achieve a product tailored for anticipated market demand sweet-spots while leveraging common production and transportation infrastructure.