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Indonesia Utility Secures Coal Stocks to Avert Outages

The world’s top exporter of coal used in power plants and China’s largest overseas supplier has announced an export ban during January

Coal is unloaded from a barge at the Suralaya coal-fired power plant at Cilegon in Banten province on Java island. Photo: AFP.


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

Indonesia, the world’s top exporter of the coal used in power plants and China’s largest overseas supplier, announced a ban on Saturday on exports during January to avoid outages at domestic generators.

The move has driven up coal prices in China, though Indonesian authorities are set to reexamine the ban on Wednesday. The squeeze has been exacerbated by a Chinese ban on imports from Australia over an ongoing political spat.

Australia used to be China’s second-largest source of coal imports, accounting for over 30% of China’s total coal imports. “This fell to 26% in 2020, which was still significant,” Helen Lau, analyst at CCB International, said.

But such imports plunged 90% year-on-year from January to November 2021 to 5 million tonnes, or 3% of China’s total coal imports, Lau noted.

Raising Stockpiles

Perusahaan Listrik Negara (PLN) said that while it had secured the additional supply, it aimed to continue raise stockpiles to a minimum usage level of 20 days.

“Coal power plants that have been in crisis are starting to see their supply issue being resolved,” PLN chief executive Darmawan Prasodjo said in a statement.

PLN had previously said it needed 5.1 million tonnes of additional supply for January to avoid widespread outages.

Pandu Sjahrir, chairman of the Indonesian Coal Miners Association (APBI-ICMA), said the group’s 10 biggest members would help PLN close the supply gap as a “very short-term solution”.

A full-month ban could be averted by such coordination, said Rory Simington, principal analyst for Asia-Pacific coal research at Wood Mackenzie.

Total Ban ‘Unnecessary’

“A halt in Indonesia’s exports would have a major impact on thermal coal markets but a total ban for January is unnecessary and unlikely to be implemented in our view,” Simington said.

“We are expecting 40 million tonnes of Indonesian exports in January and total domestic demand is in the region of 12 million tonnes; addressing any shortfall would require only a fraction of total capacity,” he added.

APBI-ICMA said in a statement on Tuesday that the group was in discussion with the government to resolve the problem and working with members to fulfil domestic obligations.

“We are optimistic that the supply shortage in some power plants can be resolved soon and we hope that exports can be gradually reopened,” it said.

The group said distribution was affected by difficulties in securing vessels to transport coal to the state utility. “The main obstacle in the field that hinders the acceleration of supply distribution is barges availability.”



  • Reuters with additional editing by George Russell





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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.


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