The coal mining industry in Indonesia has been one of the most sought after industries in the past few years. Despite the momentary slump, the industry is now back to its full running force. With the global demand for energy surging in the wake of the Russia-Ukraine conflict, many European countries choose to seek other coal supplier alternatives than Russia. According to Lloydlist, Indonesian coal producers are looking to expand their coal exports to meet the demands of their foreign customers.
However, the news of high export demand brought a new issue. PLN (Perusahaan Listrik Negara), the state-owned utility provider company, fears that there may be insufficient coal supply for internal usage. Thus, the government banned coal product exports back in January 2022. According to Bloomberg, the ban caused uncertainty that jolted the price of coal from $148 at the end of last year to $223 on the 25th of January.
Nonetheless, the local government has lifted the ban causing the price to stabilize. However, it soon increases again due to the high demands. Coal producers who have met the PLN supply quota can resume their export activities. The continuous high demand for coal prompts coal mining companies to ramp up their production. Today, coal mining is one of the most profitable industries in the country.
Insecurities Over Green Energy
Despite the promise, it is undeniable that the current world trend is shifting to greener energy. With the global climate crisis becoming critical, the need for sustainable energy sources increases. The European Union has set a target of reducing gas emissions up to 55% by 2030, and China is currently the leading wind and solar energy producer in the world. In addition, the CSIS also wrote that the International Energy Agency predicts that 36%-40% of the world’s solar and wind energy will come from China soon.
Global citizens too are transitioning to welcome a greener way of life. The sales of electric cars have seen a sharp increase as reported by The Guardian regarding the skyrocketing sales of EV cars in the United Kingdom. In addition to environmentally conscious individuals, the increasing demand may have resulted from the exorbitant petroleum price affected by the Russia-Ukraine conflict. In short, global citizens are beginning to utilize green products in their everyday activities.
The trend of investing in renewable energy is directly affecting the profitability of conventional energy companies. Companies in the coal, oil, and gas industries will have to make massive changes to suit the changing trend. However, this change may not be for another 10 to 15 years. Realistically, despite the promise of using more green energy, most countries are not yet ready with the necessary infrastructures. The most obvious example is the number of available EV charging stations.
Profiting from Coal Mining
As mentioned before, the skyrocketing price of coal means that a coal mining business can rake in large amounts of profits. The entrepreneurs who are aware of this information should be able to utilize this gold mine opportunity. Despite the expensive energy price, many businesses are benefitting and profiting from the coal price hike. For example, trucking businesses, barge shipments, trading companies, and vessel shipping companies.
For shipping companies, the expensive petroleum price is not a lot compared to the profit they earn. Due to the high demand for coal exports, shipping companies are charging high fares to trading companies. The increase in coal exports also contributes to the increase in trucking and barge shipment needs. This in turn benefits the spare parts, insurance, and even warehouse companies. The trickle-down effect continues in this sector.
Other companies that have already been involved in the mining industry can also increase their profit by expanding their products and services. For example, a mining company that sells locally may grow their business to exporting. To create a reputable and professional image, the company might need a representative office in the capital city. An economical alternative is to rent a serviced office or a virtual office.
The function of the representative office is to meet with potential buyers and hold meetings. In a way, the mining site will be the production site while all business conducts and negotiations can be done from the office.
For more information on company establishments, virtual offices, and serviced offices, visit www.meso.co.id or contact us via Whatsapp on 0812 1315 489.
