Indonesian government has yet to reach a decision on lifting its coal export ban as authorities discussed solving distribution challenges within the coal supply chain to domestic power plants, a mining group executive said.
The world’s leading thermal coal exporter suspended coal exports on January 1, 2022 after Indonesia’s state power utility reported dangerously low inventory levels of the fuel, putting Southeast Asia’s biggest economy on the brink of widespread power outages.
The move had driven up global coal prices with international buyers monitoring closely discussion between Indonesian authorities and the local coal industry.
Indonesia’s state utility already secured an extra 7.5 million tonnes of coal supplies on Tuesday, January 5, 2022 as a means to avert power outages, boost stocks and increase the chances of the government lifting its export ban soon.
Meeting with Miners
The country’s Coordinating Ministry of Maritime and Investment Affairs met with miners and other related industry again today, January 9, 2022, but has not made any decision yet regarding resuming exports, said Hendra Sinadia, executive director of the Indonesia Coal Mining Association.
“One of the issues discussed was the limited availability of vessels to transport the coal to power plants,” he said.
Senior minister Luhut Pandjaitan said the coal supply emergency at local power plants is over, but the government still needed to continue discussing policies in this area.
The discussion will be resumed on Monday, January 10, 2022 a spokesman for minister Luhut said today, January 9, 2022.
Rory Simmington, Principal Analyst for Asia Pacific coal research at Mackenzie is cited to have said:
“A halt in Indonesia’s exports would have a major impact on thermal coal markets but a total ban for January is unnecessary and unlikely to be implemented in our view.
“We are expecting 40 million tonnes of Indonesian exports in January, 2022 and total domestic demand is in the region of 12 million tonnes; addressing any shortfall would require only a fraction of total capacity.”
Rory Simmington, Principal Analyst, Mackenzie
As a result of the ban, some smaller miners in Indonesia declared force majeure on their shipments, the legal term for when a supplier cannot meet a contract because of forces beyond their control, coal traders based in Singapore and India said
Sabrin Chowdhury, an analyst at Fitch Solutions, part of Fitch Group said:
“If Indonesia’s coal export ban were to be extended, China would need to resort to Australian coal once again, with the latter being a major beneficiary of Indonesia’s coal export ban.”
Sabrin Chowdhury, analyst, Fitch Solutions
Countries hoping for quick resumption of exports
Last week, Japan’s embassy in Jakarta asked Indonesia’s energy ministry to exclude high-calorific coal from the export ban as they are not used by local power plants and for permission for five vessels already loaded with coal to depart for Japan.
South Korean Trade Minister Yeo Han-koo on Friday, January 7, 2022 also held a video call with his Indonesian counterpart to convey “concerns about Indonesia’s coal export ban and strongly requested the Indonesian government’s cooperation for a prompt resumption of coal shipment,” South Korea’s Yonhap news agency reported.
Japan and South Korea are among the top destinations for Indonesian coal and together with China and India, they accounted for 73% of its exports in 2021, ship tracking data from Kpler showed.
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