Despite the global shift toward clean energy transitions, the coal mining business remains a strategic sector in the global economy. Many predict that demand for coal will persist in the future, albeit with changes in its intensity. This is driven by energy needs in developing countries, industrial infrastructure, and the limitations of renewable energy technology in fully meeting global demand.
Data from the International Energy Agency (IEA) reveals that coal still supplies around 27% of the world’s primary energy needs as of 2023. While the adoption of renewable energy continues to grow, developing countries like India, Indonesia, and several African nations heavily rely on coal to meet their increasing electricity demands.
India, for instance, is the second-largest coal consumer in the world after China. The country relies on coal for more than 70% of its electricity production. With significant population growth and rapid industrialization, coal demand is expected to continue rising until 2040. Similarly, countries like Vietnam and the Philippines are also building coal-based power plants to support their industrialization.
Renewable Energy: Not Yet Ready to Fully Replace Coal
Although investments in renewable energy are increasing, the technology still faces major challenges. One of these is intermittency, the inability of renewable sources like solar and wind power to provide stable electricity supply due to weather dependency.
This makes coal-based power plants a reliable solution, especially to meet electricity demand during peak consumption periods. Even in developed countries such as Germany, known for its environmentally friendly energy policies, coal remains a vital energy source when renewable supply falls short.
Additionally, the investment costs and infrastructure challenges of renewable energy remain significant barriers, especially in developing nations. Without substantial subsidies, it is difficult for renewable energy to compete with the relatively low cost of coal.
Coal as an Industrial Raw Material
In addition to being used for electricity generation, coal plays a crucial role in industrial sectors. The steel industry, for instance, relies heavily on coking coal as a primary raw material. Global steel production, which reached over 1.8 billion tons in 2022, largely depends on coal in its processes.
The cement industry, a backbone of global infrastructure development, also uses coal as a primary energy source in its production processes. With projected infrastructure growth in Asia and Africa, coal demand in this sector is expected to remain robust.
Clean Coal Technology: Addressing Environmental Criticism
One of the biggest challenges for the coal industry is criticism regarding its environmental impact. However, advancements in clean coal technology offer new hope for the industry. Technologies such as Carbon Capture and Storage (CCS) enable a reduction of carbon emissions from coal-based power plants by up to 90%.
Countries like the United States and China have invested billions of dollars in developing this technology. In Indonesia, the government has also started adopting clean coal technology to ensure the sustainability of the industry in the long term.
Additionally, innovations in coal utilization are being developed. One example is coal gasification, which allows the conversion of coal into synthetic gas that is more environmentally friendly and can be used as fuel or raw material for the petrochemical industry.
Indonesia’s Strategic Role in the Global Coal Market
Indonesia, as one of the largest producers and exporters of coal in the world, holds a strategic role in maintaining global coal market stability. In 2022, Indonesia exported approximately 455 million tons of coal, with China, India, and Japan as its three largest buyers.
The growing energy needs in Asian countries ensure that Indonesian coal remains a highly sought-after commodity. Even amid global pressure to reduce coal usage, demand from these nations is expected to remain strong over the next two decades.
Moreover, the Indonesian government’s policy of encouraging coal downstreaming, such as gasification and coal-to-liquid production, is also expected to increase the added value of this commodity in the future.
Challenges and Opportunities Ahead
Although the prospects for the coal mining business appear bright, the industry is not without challenges. Global pressure to reduce carbon emissions, coal price fluctuations, and competition from renewable energy are some of the hurdles.
However, with the right strategies, the industry can continue to thrive. Product diversification, adoption of environmentally friendly technologies, and increased operational efficiency are measures that can be taken to address these challenges.
On the other hand, opportunities are also abundant, particularly in developing markets. With rapid population growth and urbanization, energy and infrastructure needs in these countries will continue to rise, providing significant opportunities for the coal industry to remain relevant.
