Because Indonesia is already signatory to the Asian free trade agreement, it will be exempt from China’s move to hit coking coal imports with a 3% increase and 6% for thermal coal, he said.

“Our BBM project is in Indonesia which is an existing signatory to the Asian free trade agreement while Australia is yet to finalise its free trade agreement with China,” Lynch said.

“At this stage, Indonesia is only a relatively small and new entrant to the seaborne traded coking coal market, exporting less than 10 million tonnes per annum compared to Australia which exports about 120Mtpa.

“Therefore, the exposure of the Chinese domestic coking coal industry is relatively small at this stage. However, the exports of coking coal from Indonesia are expected to grow at quite a substantial rate into the future based on the inherent competitive advantages that Indonesia has over Australia.”

Lynch said Cokal, which is aiming to start production at its BBM mine site in Central Kalimantan next year, would benefit from Indonesia coking coal being 3% more competitive in the Chinese market than imports from Australia.

“In a similar way that Indonesia overtook Australia as the largest exporter of thermal coal some three years ago, people expect Indonesian coking coal exports will also begin to rise and ultimately place pressure on Australian producers,” he said.

“We definitely see in our BBM project we have a lot of those competitive advantages.”

Lynch said Cokal was aiming to start construction of the mine later this year with first production targeted in the second half of 2015.