Southeast Asia coal demand surges, Vietnam becomes new growth point

(Reuters) - Demand for electricity in Southeast Asian countries such as Vietnam and the Philippines is likely to boost international coal trade and consumption this decade, allowing Southeast Asian countries to replace China and India as major consumers of coal, coal industry analysts expect.

Indonesian Coal Mine Association chairman Priyadi recently said at the International Coal Conference in Asia that coal imports in China and India are expected to peak in 2025, but coal imports in Southeast Asia will continue to grow.

The Indonesian Coal Mines Association expects coal imports from Southeast Asian countries, including Vietnam and the Philippines, to grow nearly 3 percent annually from 140.9 million tons last year to 170.9 million tons in 2030.

Vietnam is considered the most promising market for growth. Vietnam's coal imports are expected to reach 66 million tons by the end of this year, up sharply from 47.8 million tons last year, said Dinh Quang Trong, deputy general manager of coal trade at the Vietnam State Coal and Mining Group.

"By 2035, Vietnam's coal imports will peak at 86 million tons per year. About 70 to 75 percent of the total coal consumption will be used for power generation."

In the first eight months of the year, Philippine coal imports rose 7.6 percent, while Malaysia's coal imports rose 4 percent, according to data from analytics firm Kpler. Malaysia, the Philippines and Indonesia are the Asian countries with the lowest renewable energy penetration outside the Middle East.

"The average age of installed coal capacity in Indonesia is relatively young, so the long-term demand for coal will remain strong," said Patriciya, senior market research manager at Indonesian coal giant Adaro Energy.

Nickel smelters in Indonesia are also pushing for coal-fired power generation, Priyadi told Reuters.

Indonesia is also pursuing an energy transition to achieve its goal of net-zero emissions by 2060. The Asian Development Bank (ADB) on September 20 approved a $500 million loan to Indonesia to help the country with its energy transition. Indonesia has also signed a "Just Energy Transition Partnership" agreement with the Group of Seven leading nations, receiving $20 billion in funding. However, recent proposals by Indonesia's energy ministry to install wind power are significantly behind the agreement's target, and there are concerns that Indonesia will not be able to reach net zero emissions by 2060.