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Indonesia relaxes export ban to allow departure of 37 coal vessels

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JAKARTA – Indonesia, the world’s largest exporter of thermal coal, has authorized the departure of 37 loaded coal vessels after obtaining approvals from the authorities, the coordination ministry for maritime affairs and investments said on Thursday.

In a statement, the ministry said an export ban implemented on January 1 was relaxed for miners who met the requirement to sell part of their output for local power generation after the state-owned company bought enough coal from the power plants to guarantee 15 days. operations.

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“I ask that this be closely monitored so that it also becomes a moment for us to improve national governance,” Luhut Pandjaitan, coordinating minister of maritime affairs and investments, said in the statement.

The 37 vessels included 14 vessels whose customs clearance was announced earlier in the week. It was not immediately clear how much coal the ships were carrying.

Sending shockwaves through global energy markets, Indonesia banned exports after state power company Perusahaan Listrik Negara (PLN) reported extremely low coal stocks at power plants electricity, which has left Indonesia on the verge of widespread blackouts.

Indonesian authorities blamed the coal supply crisis on miners who failed to fulfill a so-called Home Market Obligation (DMO), forcing them to sell 25% of production to local buyers with a price cap of 70 $ per ton for power plants.

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The government has come under pressure from coal miners and some of its biggest buyers, including Japan and South Korea, to relax the export ban.

According to data from Refinitiv Eikon, around 120 ships were loading or waiting to unload the Indonesian coal ports of Kalimantan on the island of Borneo on Wednesday.

The ministry said in a statement on Thursday that mining companies that had fulfilled their sales contract with PLN and 100% of their DMO requirements for 2021 would now be allowed to start exporting.

Miners who failed to fulfill their PLN and DMO contracts would face fines, he said.

Citi, in a Jan. 5 research note, estimated that about 490 of the country’s 631 coal miners have yet to meet their DMO obligation. These 490 coal miners account for around 35 to 40 percent of Indonesia’s total production, he added.

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According to the minutes of a meeting between the miners and the Commerce Ministry earlier this month, 418 miners did not sell any of their charcoal to local producers last year.

Indonesia’s two largest coal groups, PT Bumi Resources and Adaro Energy, as well as state-owned coal miner Bukit Asam, were among the companies that have said in the filings that they meet DMO requirements.

Bumi Resources chief executive Dileep Srivastava said on Thursday the company was awaiting formal confirmation from the government, but said easing would be a positive development.

A spokesperson for Adaro said his ships had not yet left the port on Thursday morning. (Reporting by Bernadette Christina and Fransiska Nangoy; Editing by Ed Davies and Richard Pullin)

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