Indonesia bans coal exports in January on domestic supply worries

[JAKARTA] Indonesia has banned coal exports in January due to concerns over low supplies for domestic power plants, local media reported on Saturday (Jan 1), citing a letter sent by the energy ministry.

The South-east 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 per cent of annual production to state utility Perusahaan Listrik Negara (PLN), at a maximum price of US$70 per tonne, well below current market prices.

In the letter cited by local media Kumparan, the ministry instructed that all coal at harbours should be stored to supply power plants and independent power producers (IPP).

“The export ban will be evaluated and reexamined based on the stock realisation of coal stocks for PLN’s power plants and IPP,” the letter said.

The ministry and PLN did not immediately respond to Reuters’ requests for comment, while the Indonesian Coal Miners Association said it would issue a statement regarding the export ban.

In August 2021, Indonesia suspended coal exports from 34 coal mining companies it said failed to meet domestic market obligations between January and July last year.

Indonesia is among the top 10 global green house gas emitters and coal makes up around 60 per cent of its energy sources.