Indonesia relaxes coal export ban

Indonesian authorities late on Monday January 10th relaxed its export ban on coal, brought in at the beginning of the year and scheduled to last a month,

In the first clear step to relax the export ban, Indonesia late on Monday agreed that 14 coal vessels could depart as soon as they obtained permits from mining and transport authorities.

However, the transport ministry had not allowed any export-bound ship with coal to leave ports as of Tuesday morning as it awaited a directive from the energy ministry, director of sea transportation Mugen Suprihatin Sartoto told Reuters.

There were currently 121 vessels either loading or waiting to load off Indonesian’s coal ports in Kalimantan on the island of Borneo, according to Refinitiv data.

The Indonesian government said that it would conduct a review on Wednesday. If it decides to scrap the ban, it will do so gradually as it considers how the resumption affects compliance with so-called Domestic Market Obligation (DMO) rules, senior minister Luhut Pandjaitan said in a statement late on Monday.

The current DMO rules require miners to sell 25% of their output to the local market at a maximum price of $70 per tonne for domestic power plants.

Luhut said that the government was considering a formula that would make miners pay a levy to a government agency, which would in turn use the revenue to help PLN pay for its coal needs at market prices.

Indonesia, the world’s biggest thermal coal exporter, suspended coal exports on January 1st after Indonesia’s state power utility reported dangerously low inventory levels of the fuel, meaning that there was a danger of widespread power cuts.