Indonesia Permits First Bulkers to Resume Coal Exports

Indonesia issued permits on Monday for the first of the coal bulkers to depart to meet its obligations to international customers. However, government officials are warning that while the coal supply has improved at the country’s power plants that it will continue to be a gradual resumption of shipments with the barges priority being to ensure that the domestic supply of coal is fully restored.

Chinese officials confirmed that they had received reports that most of the 14 vessels that are being permitted to depart will be heading to China. This comes as China’s Global Times said that the coal supplies at the southern ports would provide approximately 19 days of fuel to the coastal power plants. China is reporting that it expects 67 bulkers will arrive from Indonesia by the end of the month adverting further shortages in supplies of coal. China's General Administration of Customs reports that in the first 11 months of 2021 China imported 290 million tons of coal of which nearly two-thirds comes from Indonesia.

There had been reports in recent days that China’s coal imports might seek to impose penalties on the Indonesian miners. It was suggested that they were prepared to invoke force majeure clauses from their contracts seeking to fine the miners for the failure to fulfill their contractual obligations.

Indonesia had announced on the last day of 2021 that it was banning all exports of coal in January. The world’s largest exporter of thermal coal, Indonesia supplies coal to countries including China, Japan, India, the Philippines, and South Korea. Prices of coal fluctuated wildly as the countries worked to cover a potential shortfall in supply. It was announced that the Philippines’ energy secretary Alfonso Cusi asked the foreign affairs department to become involved and in a letter to Indonesia’s Minister of Energy and Mineral Resources appealed for a reversal of the policy. The Philippines imports roughly 2.3 million tons of coal each month from Indonesia that is used to create approximately 60 percent of the county’s power. There were fears of imminent power shortages in the Philippines.

Reuters reports that Indonesia’s mining industry was blaming mismanagement at the country’s state-owned power utility for the crisis after they let supplies fall to critical levels as low as three days’ supply at some of Indonesia’s power plants. Government officials are blaming the miners saying they had supplied just one percent of the monthly requisition. By law, Indonesia’s mines are required to withhold 25 percent of production to be sold at low prices on the domestic market.

Indonesia government officials planned another round of meetings with the coal producers on January 12 to discuss the ban and long-term supply arrangements for the country.