Indonesia bans coal exports in January on domestic power worries

[Indos]

Philippines urges Indonesia to lift coal export ban as talks proceed​

Coal is unloaded from a barge at the Suralaya coal power plant in Cilegon, Banten, on Sept. 22 last year. The government banned coal exports starting Jan. 1 this year to address fuel shortages in 20 power plants. (AFP/Ronald Siagian)


Enrico Dela Cruz and Fransiska Nangoy (Reuters) ● Mon, January 10, 2022


The Philippines has become the third Asian country to publicly urge Indonesia to lift its coal export ban, adding more external pressure on the Indonesian government, which is also facing pressure at home from coal mining companies.

The Philippines' Energy Secretary Alfonso Cusi has appealed to Indonesia to lift the ban, saying the policy will be detrimental to economies heavily reliant on the fuel for power generation, Manila's Department of Energy said on Monday.

Indonesia, the world's biggest thermal coal exporter, suspended exports on Jan. 1 after state-owned electricity company PLN reported dangerously low inventory levels of the fuel at domestic power stations.

The ban drove coal prices in China and Australia higher last week, while scores of vessels slated to carry coal to major buyers such as Japan, China, South Korea and India have been in limbo off Kalimantan, home to Indonesia's main coal ports.

Read also: PLN’s coal shortage over, ministers say

The Philippines' move follows similar requests from Japan and South Korea. Cusi made the appeal in a letter sent via the Department of Foreign Affairs to Indonesia's Energy and Mineral Resources Minister, Arifin Tasrif, the energy department said in a news release, without specifying when the letter was sent.

Cusi had asked the foreign affairs department to intercede and appeal on behalf of the Philippines through the ASEAN cooperation mechanism. The Philippines, which is still heavily dependent on coal for power generation, buys most of its requirements from Indonesia, and some, more expensive, supplies from Australia and Vietnam. Nearly 70 percent of the 42.5 million tons of Philippine coal supply in 2020 was imported, according to government data.

Power generated by coal comprises about 60 percent of the country's power mix, and in 2021 the country sourced 2.3 million tons per month from Indonesia to fuel its power plants, the energy department said. Senator Win Gatchalian, who heads the Senate energy committee, has called on the energy department to prepare contingency measures because of the export ban, including looking for other potential suppliers.

Talks carry on

Indonesia's Coordinating Maritime Affairs and Investment Minister Luhut Binsar Pandjaitan met with coal miners and other related industry again on Sunday, but has not made any decision yet regarding resuming exports, said Hendra Sinadia, executive director of the Indonesian Coal Mining Association (APBI).

"One of the issues discussed was the limited availability of vessels to transport the coal to power plants," he said. International buyers are monitoring closely discussions between Indonesian authorities and the local coal industry. An energy ministry official had pledged to review the one-month ban after Jan. 5.

Luhut has said that the coal supply emergency at local power plants was over, but the government still needed to continue discussing policies in the area. Read also: PLN’s coal shortage over, ministers say The discussion will be resumed on Monday, a spokesman for the minister said on Sunday.

Philippines urges Indonesia to lift coal export ban as talks proceed

Pressure is building both at home and abroad for Indonesia to lift the ban.

www.thejakartapost.com

 

[Indos]

Coal price surges as Ukraine tensions worsen supply woes​

Reuters | January 28, 2022 | 7:58 am Markets Europe Coal

Global coal prices have shot back towards record highs as the Ukraine crisis raises expectations that European buyers will start loading up on the fossil fuel for fear that a standoff between Russia and western nations will cut off gas supplies.

The benchmark Newcastle coal index has soared by over a third this month to $262 a tonne, fuelled initially by a month-long export ban by top supplier Indonesia and now by worries that any military engagement in Ukraine will sever gas supplies from Russia.

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Europe relies on Russia for around 35% of its natural gas, and has been grappling with a gas shortage since last summer that sent local prices to record highs late last year.

Gas prices started to ease in recent weeks as imports surged, but have rallied again as the escalating tensions with Russia raise concerns about potential supply disruption.

To protect themselves from any fuel shortages, European utilities have stepped up imports of coal, further tightening a market that has yet to recover from Indonesia’s shock ban that cut coal flows during the peak winter demand season.

“Spot cargoes are becoming scarcer in the near term, with movement towards Europe where prices are jumping due to gas prices and the simultaneous effect of the recent Indonesian ban,” said Puneet Gupta, founder of Indian coal marketplace Coalshastra.

While Europe’s coal use has declined sharply in recent years – accounting for just 6.2% of global coal use in 2020, according to BP data – European buyers have aggressively stepped up purchases since mid 2021.

Under pressure to meet climate targets, several EU countries have shut down old coal-fired power plants. Some countries retain coal plants for use for back-up supply but many have already been fired back up due to high gas prices.

According to commodity flows tracking firm Kpler, Europe is on course to import 5.58 million tonnes of thermal coal in January, the highest monthly total since November 2019, and over 1 million tonnes more than the monthly average in 2021.

The buying has helped coal prices snap back sharply after drifting off record highs struck last October on shortages in China and India amid extreme weather and post-pandemic industrial demand.

Knock on effect​

The rise in European consumption could squeeze out other buyers, especially in number two coal consumer India.

India will have to pay a higher price for seaborne coal as supply tightens in the coming weeks, said Rajendra Singh, managing director at Komin India Resources Pvt Ltd, a commodities trading firm.

“The Ukraine-Russia geopolitical issue will exacerbate the logistical challenges due to the coal ban by the Indonesian government,” Singh said.

Top coal consumer China gets roughly 90% of its supplies from domestic mines, making it better insulated from international market gyrations.

Even so, traders there remain wary of any lengthy disruptions to international coal flows given the country relies on coal for over 60% of its electricity.

In the Philippines, where coal also accounts for around 60% of electricity production, power producers have been told to use more domestic coal supplies where possible.

“For other power plants that solely rely on imported high-grade coal, there is no other recourse but to seek other sources of coal from nearby countries such as Australia, Russia and Vietnam,” said Arnulfo Robles, executive director of lobby group Philippine Chamber of Coal Mines.

“But the downside is that the supply of high-grade coal from these countries is more expensive given high freight costs,” he said.

The impact of the Indonesian ban has also been felt more on high-energy coal as replacement options are more limited, said Rory Simington, a principal analyst at Wood Mackenzie While prices should fall in February, the picture could change in the event of the cancellation of the Nord Stream 2 gas pipeline to Europe or an interruption to Russian coal exports, he said

Indonesian outlook unclear​

As well as uncertainly over Ukraine, importers are still unclear over what to expect from Indonesia after authorities there said only miners that have complied with new domestic market sales regulations will be allowed to resume exports after the official ban expires on Jan. 31.

Private power plants in India would “definitely be impacted” by the Indonesian coal ban, as the issue has not been fully resolved and Indian utilities mostly buy from small miners, said Kirit C Gandhi, joint president at Indian cement firm Shree Cement.

“If fresh loading is not allowed in the next 5-10 days, there will be a further jump in prices. Consumers cannot wait any further because this is peak buying season,” Gandhi said.

Vasudev Pamnani, managing director of Indian consultancy Lavi Coal Info OPC Pvt Ltd, said buyers have “very few options, there are supply issues everywhere.”

(By Sudarshan Varadhan, Enrico De la Crus, Muyu Xu, Shivani Singh and Yuka Obayashi; Editing by Gavin Maguire and Richard Pullin)

Coal price surges as Ukraine tensions worsen supply woes

The benchmark Newcastle coal index has soared by over a third this month to $262 a tonne.

www.mining.com