Out-Law News 1 min. read

Indonesia lifts coal export ban on 139 companies

Indonesia has lifted its coal export ban on 139 companies as they met domestic market sales requirements, according to Reuters.

Reuters reported that 75 vessels were allowed to load coal from companies that had met all their domestic market obligation (DMO) requirements, and another 12 were allowed to proceed after providing a written assurance of compliance and acceptance of penalties.

This is part of Indonesia’s plan to gradually lift the coal export ban it introduced at the start of the year, after securing enough supplies for domestic needs. The DMO requires coal miners to supply 25% of their annual production to state-owned electricity company PT PLN at a maximum price of US$70 per metric tonne.

According to the Indonesian Coordinating Ministry of Maritime and Investment Affairs, the country last week allowed 37 vessels loaded with coal for export to depart after they obtained approvals from Indonesian authorities.

According to a local report, the ban has been eased for miners that have met a requirement to sell a portion of their output for local power generation, after the country procured enough coal to ensure 15 days of power.

Coordinating Maritime and Investment Affairs Minister Luhut Pandjaitan said the situation should be supervised closely “to improve domestic governance”.

Renewables expert John Yeap at Pinsent Masons said: “Whilst the period of the ban was short, it nevertheless caused ripples in the market, with concerns around future reliability of supply. Internally no doubt the Indonesian authorities will be examining the reasons that gave rise to the need for the ban to ensure they are addressed. Externally, buyers will also no doubt be factoring this risk into their future coal procurement strategies.”

The head of the Japanese electric utilities lobby said that the upward pressure on thermal coal prices would continue as it was still unclear when the situation will return to normal, according to a Reuters report.

China's benchmark thermal coal futures rose by as much as 7.8% in the first day of trading since Indonesia's temporary ban was announced.

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