Indonesia is concerned it could not meet its domestic coal demand and decided to ban export in January.
On January 1, Indonesia decided to ban the export of coal for a month. The government is concerned it won’t be able to meet domestic demand. The ban for January 2022 will prevent power outages, explained the Indonesian ministry of Energy and Mineral resources in a statement.
Indonesia is the world’s largest exporter of coal. Its main clients are China and India for more than half of coal exports, followed by Japan and South Korea.
In May 2021, the state-owned electricity company Perusahaan Listrik Negara, which has a monopoly on electricity distribution in Indonesia, planned to phase out coal-fired power in the country by 2060. Indonesian officials aim to achieve net zero emissions by 2070.
“If strategic actions are not taken, there will be a widespread outage” according to Ridwan Jamaludin, director-general at the Energy ministry. Almost 20 power plants with a power of 10,850 megawatts could be out because of extremely low supply.
Indonesia exports 80% of its coal production
A safe coal supply for the state electricity utility PLN is above 20 operational days. But only 1% of the coal supply requested by the government for domestic consumption was met as of January 1, 2022.
In August 2021, Indonesia already suspended coal exports from 34 coal mining companies because it didn’t supply enough coal during the first semester.
In October, Indonesian officials expected to see coal production below target by 2% because of heavy rainfalls slowing down mining production and port operations.
Indonesia massively relies on coal since it is about 60% of Indonesia’s power source. But 80% of Indonesia’s coal production is exported according to the Institute for Essential Services Reform in 2019. As such, the domestic shortage is expected to be solved rather quickly. The government plans to evaluate the situation again on January 5.
As a precaution, South Korea set up a task force to monitor the situation since 20% of its imports come from Indonesia. But the government expects to see a limited impact as it has enough stockpile and no trade disruption from other countries such as Australia.