Indonesia bans coal exports in January 2022 on domestic power worries

Indonesia has banned coal exports in January due to concerns that low supplies at domestic power plants could lead to widespread blackouts, a senior official at the energy ministry said on Saturday.

The Southeast Asian country is the world’s biggest exporter of thermal coal, exporting around 400 million tonnes in 2020. Its biggest customers are China, India, Japan and South Korea.

Indonesia has a so-called Domestic Market Obligation (DMO) policy whereby coal miners must supply 25% of annual production to state utility Perusahaan Listrik Negara (PLN) at a maximum price of $ 70 per tonne, well below current market prices.

The Indonesian Coal Mining Association (ICMA) called on the energy minister to revoke the export ban, saying in a statement the policy was “taken hastily without being discussed with business players”. Indonesian coal miners are seeking a quick resolution to the government coal export ban that is already causing fuel prices to rise and could disrupt the energy needs of some of the world’s biggest economies.

The widespread export ban may disrupt monthly coal production volumes of around 38-40 million tonnes. In recent years, Indonesia has exported about 30 million tonnes of coal in the month of January.

Meanwhile, Japan has requested Indonesia immediately remove its export ban on shipments of high grade coal and asked that five loaded vessels be given departure permits, its Jakarta embassy said in a letter to Indonesian authorities.

Before the ban came into place, Indonesia’s state utility secured an extra 7.5 million tonnes of coal supplies, helping to avert power outages, boost stocks and increase the chances of the government lifting its export ban soon.

In August 2021, Indonesia suspended coal exports from 34 coal mining companies for failing to meet domestic market obligations between January and July last year. Indonesia is among the top 10 global greenhouse gas emitters and coal makes up around 60% of its energy sources.

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