Indonesia aims for coal ban resolution at weekend

A man stands on a boat as coal barges queue to be pulled along Mahakam river in Samarinda, East Kalimantan province, Indonesia, August 31, 2019. Picture taken August 31, 2019. REUTERS/Willy Kurniawan

JAKARTA, Jan 7 (Reuters) – Indonesian officials aim to wrap up discussions at the weekend about whether to lift a ban on coal exports, after a minister declared an end to a domestic supply crisis that sent international prices higher this week.

The world’s biggest thermal coal exporter suspended coal exports on Jan. 1 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.

Coordinating Minister for Maritime and Investment Affairs, Luhut Pandjaitan, said on Thursday the domestic supply emergency at state utility firm PLN was over but said the government was still discussing issues related to the ban. read more

“Hopefully, tomorrow (Saturday) discussions will be finished,” Luhut told Kontan news website and other local media on Friday, after he met miners and other authorities.

He had earlier said his ministry would review a formula for the domestic market obligation, which requires miners to sell 25% of production to local market at a maximum price of $70 a tonne for power generators.

The ministry declined to comment on the issue on Friday.

The ban drove coal prices in China and Australia higher this week, while scores of vessels slated to carry coal to major buyers such as Japan, China, South Korea and India have been in limbo off Kalimantan, home to Indonesia’s main coal ports.

“We are watching closely the development of the talks between the local coal industry and Indonesian government,” said a spokesperson for JERA, Japan’s biggest power generator.

“In the event of a prolonged ban, we will procure coal flexibly through our global trading subsidiary,” the spokesperson said, adding that Indonesian coal accounted for about 19% of its total procurement in the last financial year.

Japan’s embassy in Jakarta asked Indonesia’s energy ministry this week to exclude from the export ban high-calorific coal not used by local power plants. It also asked that five vessels already loaded with coal be allowed to depart for Japan.

South Korean Trade Minister Yeo Han-koo held a video call with his Indonesian counterpart on Friday 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.

Hendra Sinadia, executive director of Indonesia Coal Miners Association, said the group held calls with Chinese coal importers to ease their worries.

“We want to explain to our partners in China regarding the policies taken by the government, which due to the nature of the emergency had to prioritise domestic needs. But we are working so export can be resumed as soon as possible,” he told Reuters.

J-Power, another Japanese power generator, expected the ban to be eased as soon as PLN secured the coal they needed, a spokesperson for the Japanese company said.

As of Wednesday, PLN said it had secured 13.9 million tonnes of coal commitments but needed 20 million tonnes for a safe 20-day stock.

Reporting by Fransiska Nangoy, Bernadette Christina Munthe; Additional reporting by Yuka Obayashi in Tokyo; Editing by Ed Davies and Edmund Blair

Our Standards: The Thomson Reuters Trust Principles.