Karen Graham – Shares of Indonesia's leading coal miners fell on Monday (Jan 3) after the government banned exports of coal for January due to concerns about low supplies triggering power cuts in the world's biggest exporter of thermal coal.
On Saturday, the temporary export ban went into effect with the energy ministry saying the move was aimed at safeguarding its domestic power supply. The temporary export ban would prevent almost 20 power plants providing a total of 10.9 gigawatts of power from shutting down, according to a senior official at the ministry.
Indonesia uses a Domestic Market Obligation (DMO) policy whereby coal miners must supply 25 percent of annual production to state utility Perusahaan Listrik Negara (PLN) at a maximum price of $70 per ton, well below current market prices.
President Joko Widodo on Monday threatened to revoke business permits for any miners who failed to meet the domestic market (DMO) requirements, according to Reuters.
There is a wider, global risk to the move, with the possibility of it creating a negative impact on economic linchpins China, India, Japan, and South Korea, which together received 73 percent of Indonesian coal exports in 2021, ship-tracking data from Kpler showed.
On Monday, according to Channel News Asia, shares of Indonesian miner Adaro Energy fell 3.1 percent, while Bukit Asam lost 3.3 percent and Bumi Resources tumbled 2.9 percent in early trade.
The chairman of the Indonesian Coal Mining Association (ICMA), Pandu Sjahrir, called on the government to revoke the ban, saying in a statement it was "taken hastily without being discussed with business players".
After meeting with trade ministry officials over the weekend, Sjahrir said, "The main objective now is to avoid power outages. For the very short term, the solution is for ten of our biggest members to try to help with PLN's shortage."
The situation is still a bit volatile, however, the ministry said it "expects Indonesia's coal export ban would have a limited short-term impact, considering the country's coal inventory and coal shipments from other countries, including Australia."