Fifteen to twenty times a month, a NORDEN vessel loads coal in Indonesia, and NORDEN transports the coal to especially China, which is the world’s largest consumer of coal, the world’s largest producer of coal and the world’s largest importer of coal. NORDEN aims for additional business in Indonesia, which has large coal reserves.
NORDEN is part of the Indonesian coal adventure. Nowhere else in the world does NORDEN load more dry cargo than in Indonesia, and it is coal that fills up the vessels. NORDEN aims for more business in Indonesia, which has large reserves of the world’s most important source of energy after oil and which is optimally placed relative to the largest users of coal in the world.
The demand curve for coal only goes in one direction – and that is up!
Coal has become the fastest growing global source of energy as the last decade’s growth in the consumption of coal has been driven by financial growth in the developing countries, particularly China. Since 1999, the global coal production has increased by an annual average of 4.1% to a level of 7.9 billion tonnes in 2012. Figures from the International Energy Agency,World Coal Association and BP show that 30% of the world’s energy demand is now covered by coal — the largest share since 1969. Volume-wise, coal is indisputably also NORDEN’s largest type of cargo. In 2012, the 250 vessels in NORDEN’s Dry Cargo fleet transported 64mt (million tonnes) of commodities (excluding cargo on vessels chartered out), and of this, coal constituted 40% or around 25mt.
Indonesia has now surpassed Australia as the world’s largest exporter of thermal coal to the energy sector, and 15–20 times a month, a NORDEN vessel loads in Indonesia, which continues to have an annual GDP growth rate above 5% despite a certain slowdown in the economy. First and foremost, NORDEN transports the Indonesian coal to China. Other loads are transported to India, Japan,Thailand, the Philippines or another country in the region.
NORDEN’S MR. INDONESIA
The daily responsibility for nurturing and further cultivating NORDEN’s interests in the Indonesian market lies with NORDEN’s subsidiary in Singapore where group vice president & CEO Jakob Bergholdt has several employees who spend a significant part of their time on the Indonesian market. At the head of this is NORDEN’s Mr. Indonesia, Indonesian-born general manager Mukhlisin Aziz, who will soon hand over the responsibility for the Supramax section in Singapore to others in order to fully concentrate on the job as head of the Asia Business Development Desk — with Indonesia as the central area.
”The Asian growth economies import around 80% of all commodities sold worldwide. It is coal, iron ore cement, grain, etc. – it is all the commodities which are the prerequisite for the impressing growth rates that we are seeing out here. Asia is the epicentre of the global dry cargo market with China as the largest importer of coal and dry cargo products in general and Indonesia as the world’s largest exporter of coal, and that is primarily thermal coal to the energy sector. Therefore, Indonesia has a very high priority for the company here in Singapore. We have close commercial connections to Indonesia, and they are continuously expanded,” says Bergholdt. Mukhlisin Aziz’ new role will further increase his focus on Indonesia and on creating connections between the coal buyers in the region and the coal mines in Indonesia, Bergholdt points out.
IT ALL BEGAN IN 2000
NORDEN’s business activities in Indonesia date back to the year 2000 and really picked up in 2007/2008 at the same time as the Indonesian export of thermal coal began to boom. The vessel types used for the transport of coal include everything from
Handysize (with a cargo carrying capacity of 28,000–38,000 tonnes) over Supramax and Panamax to Capesize (with a cargo carrying capacity of 171,000-180,000 tonnes). Vessels without cranes either load at the dock or at anchorage by means of floating cranes whereas vessels with cranes often load at anchorage by means of the vessel’s own cranes.
According to Bergholdt, NORDEN has been able to create good relations with several large Indonesian mining companies, which have provided the company with valuable knowledge on potential new business. This has been important in the
development of the future strategy in the market. NORDEN has also made a lot of effort to find new potential customers in Indonesia. The motto in this process has been that no customers are too small for NORDEN, just as no customers are too large.
NORDEN’S SPECIAL STRENGTHS
On NORDEN’s special strengths in the Indonesian market, general manager Mukhl[n Aziz says: “First and foremost, we are able to offer our Indonesian customers some competitive freight
rates. But we also share knowledge with them by e.g. inviting them to a seminar on laytime, just as we are happy to give them technical and/or port related advice in connection with expansion projects. By and large, we are happy to assist our customers if they need to draw on the expert knowledge which NORDEN has as a flexible, reliable and ambitious shipping company, which places great emphasis on long-term customer relations.”
It is Aziz’s clear estimation that Indonesia will remain the world’s largest exporter of thermal coal. With its coal reserves, the country even has great opportunities to increase its production in the coming years. The main obstacle is the infrastructure in Indonesia — it is simply still a challenge in some areas to get the coal to the loading port. But if global demand and global market price increase to a healthy level, it is likely that the Indonesian coal mines will solve the infrastructural problems.
NORDEN AIMS FOR MORE
“Compared with other leading coal exporting countries such as Australia and South Africa, Indonesia is geographically optimally placed relative to China, India and potential new large markets
such as Myanmar and Vietnam. NORDEN has knowledge of several new power plant projects in the region, which aim to get the main part of their supplies exactly from Indonesia by which they not only ensure low freight expenses but also high-quality coal,” says Aziz.
Group vice president & CEO Jakob Bergholdt adds:“Even though NORDEN already now has a solid footing in the Indonesian coal market, it is our clear ambition to strengthen this further by getting our share of the upside which the market is facing.”
Large increase in transportation of coal
International transportation of coal is done by ship – primarily by the vessel types Supramax, Panamax and Capesize in which NORDEN is strongly represented. Since 1990, seaborne trade with thermal coal for power plants has grown by an annual average of around 7% whereas seaborne trade with coking coal for the production of steel has had an annual average growth rate of 2.3%. In total, global seaborne coal trade reached 1,113 million tonnes in 2012. But that only constitutes 15% of the coal which is consumed globally as the main part of the production in the world’s more than 50 coal producing countries is consumed in the domestic markets. Over shorter distances — especially in the producing countries — coal is transported by conveyor belts, trucks, trains and barges or (mixed with water) in pipelines.
Sources: World Coal Association and Simpson Spence & Young (SSY)
China: world’s largest coal consumer
The last decade’s significant increase in the consumption of coal has been driven by economic growth in the developing countries, especially China. The five largest consumers are China — the indisputably largest — the USA, India, Japan and Russia, which together account for 76% of global consumption. In 2012, China alone imported 235mt of coal, which roughly constitutes 7% of the country’s annual consumption of 3,607mt (an annual consumption which, volume-wise, is thus almost as large as the total global seaborne dry cargo market covering ALL dry cargo categories). Total coal consumption in Asia comprises 70% of world consumption. And there is plenty more coal where that came from.At the end of 2012, known coal reserves were estimated to be able to cover consumption for the next 109 years. The USA, Russia and China have the largest reserves with approximately 237 billion tonnes, 157 billion tonnes and 115 billion tonnes, respectively.
Sources:World Coal Association,The International Energy Agency and BP et al.
Coal covers 30% of world energy demand
Coal now covers 30% of the world’s energy demand – the largest share since 1969. One million tonnes of coal can cover the annual electricity consumption of 190,000 people. After oil, coal is thus the most important source to cover the world’s energy demand and the primary source to the production of electricity as 40% of the world’s production of electricity is based on coal. The production of electricity takes place on more than 2,300 coal-fired power plants in the world of which as many as 620 are placed in China. Coal is also used in the production of steel and cement, as liquid fuel and in the production of aluminium and paper and in the chemical and pharmaceutical industry. Thousands and thousands of different products have coal or by-products from coal as components. This goes for e.g. soap, plastic, nylon, rayon, filters for cleaning water and air and filters in dialysis machines. And it goes for products as versatile as bicycle frames, tennis rackets, cosmetics, shampoo, tooth paste and airplane hulls as e.g. the new Boeing 787, the Dreamliner.
Sources:World Coal Association, the International Energy Agency, Boeing et al.
What is coal?
Coal is a fossil fuel consisting of pre-historic plants, which have transformed into coal after being stored in swamps and peat bogs for several hundred million years under great pressure. The energy from the coal comes from the energy which the plants once got from the sun. All living plants store energy through what is called the photosynthesis. Photosynthesis is a complicated string of biochemical processes which enable plants, alga and cyanobacteria (blue-green alga) to turn the atmosphere’s carbon dioxide (CO2) into organic compounds and oxygen by means of solar energy. When plants die, the stored solar energy usually disappears through decomposition. But when plants are turned into coal, the decomposition process is stopped, which prevents the stored solar energy from disappearing. The solar energy is so to speak locked inside the coal and is only released when the coal is burned.