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Indonesia coal miners seek export ban exemptions as costs grow

Major Indonesian coal miners have sought exemptions from a coal export ban put in place at the start of the year as the costs of having scores of ships stranded offshore continue to mount.

The world’s biggest thermal coal exporter implemented the ban to avoid domestic power outages, triggering concerns for its biggest customers, such as China and Japan, just as they head into the peak winter period for electricity demand.

The Indonesian government had pledged to start a review of the ban on Wednesday but talks were postponed and energy ministry officials on Thursday said it was unclear when they might decide to end the ban.

An official at the Indonesia Coal Miners Association on Thursday said that discussions were ongoing.

The ban has driven coal prices in China and Australia higher this week, while about 100 vessels slated to carry a total 5.9 million tonnes of coal exports have amassed off Kalimantan, home to Indonesia’s main coal ports, Refinitiv data shows.

Bumi Resources BUMI.JK, Indonesia’s biggest coal miner, said in an exchange filing that while the company was still analysing the financial impact of the export ban, it may lead to demurrage and penalty charges from the delay of deliveries.

“The company hopes that the government will immediately lift the export ban imposed on companies who have fulfilled their domestic markets obligation,” Bumi said.

Indonesian coal miners must sell 25% of their output to domestic power plants at a maximum price of $70 a tonne.

Adaro Minerals Indonesia ADMR.JK, a unit of Indonesia’s second-largest coal miner Adaro Energy ADRO.JK, said in a statement that it had asked to export metallurgical coal, which is used to make steel rather than generate power.

Indika Energy INDY.JK said it would need to adjust its production levels lower should the ban continue.

Indo Tambangraya Megah ITMG.JK, meanwhile, declared force majuere because of the export ban, director Yulius Gozali said in an email.

Coal contributes roughly $3 billion a month to Indonesia’s international trade and helped to drive exports from Southeast Asia’s biggest economy to record highs last year.

Indonesia’s rupiah IDR= has dropped by about 1% since the ban and has also been unsettled by a hawkish U.S. Federal Reserve.

Japan, which imports 2 million tonnes of Indonesian coal a month, asked in a letter to Indonesia’s energy minister for the ban on high-caloric coal to be lifted and for authorities to give departure permits to five loaded vessels headed for Japan.

An Indian federal government official told Reuters his nation had not yet reached out to Indonesian authorities after receiving assurances that domestic coal supplies were sufficient.

“We are keeping a close watch. But right now we are in a comfortable position,” the official said.

As of Thursday, Indonesia had not issued any departure permits for bulk coal carriers, Transportation Ministry official Mugen Suprihatin Sartoto said.

Asian economic powerhouses China, India, Japan and South Korea together received 73% of Indonesian coal exports in 2021, ship-tracking data from Kpler showed.

State-owned Enterprise Minister Erick Thohir on Thursday said state utility PLN has secured enough coal commitments, but he wanted PLN to have a stable long-term inventory.

As of Wednesday, PLN said it had secured 13.9 million tonnes of coal but needed 20 million tonnes to reach a safe 20-day stock level.
Source: Reuters (Reporting by Fransiska Nangoy, Bernadette Christina Munthe and Sudharshan Varadhan Editing by Ed Davies, Tom Hogue and David Goodman )

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