On Saturday, January 1, Indonesia, the world’s largest thermal coal exporter, banned exports because of concerns it could not meet its own power demand, according to Reuters. The move could create an Asian coal shortage. China, India, Japan and South Korea consumed three quarters of Indonesia’s coal exports in 2021.
Indonesia enacted the ban due to low stockpiles at domestic power plants, though the government plans to reevaluate the decision.
According to Reuters, Ridwan Jamaludin, the director general of minerals and coal at the Indonesian energy ministry, said that without the ban, almost 20 power plants would have to shut down.
Under its Domestic Market Obligation (DMO) policy, Indonesian coal operators must supply 25% of their annual production to state utility Perusahaan Listrik Negara (PLN) at a maximum price of $70 per metric ton, which is lower than current market prices. PLN said the government has taken a policy to ensure that its primary energy needs, especially coal, can be met and, thanks to this support, the potential power outages for 10 million PLN customers can be avoided.
The Indonesian Coal Mining Association (ICMA) called for the ban to be revoked since it was “taken hastily without being discussed with business players.”