Potential Indonesian coal export ban deemed unlikely, say sources

Mysteel Global: Market chatter that the Indonesian government may implement a coal export ban to support the country's downstream processing industries is deemed unlikely, according to market insiders.

The speculation surfaced after statements attributed to Meidy Katrin, General Secretary of the Indonesian Nickel Miners Association (APNI) emerged from the 9th APAC Stainless Steel Industry Conference held this week in Xiamen, southeast China's Fujian province, suggesting that Jakarta might consider export bans on 12 mineral resources including cobalt, coal, copper, and silicon as well as 16 different non-mineral commodities.

This policy, similar to Indonesia's nickel ore export ban that took effect in January 2020, is aimed at boosting added value in the supply chains of these resources to attract up to $618 billion in investments, the official was quoted as saying.

However, several Indonesian coal miners contacted by Mysteel Global described the possibility of a coal export ban as "almost unlikely," though they could not confirm whether restrictions might be applied to other minerals.

"I checked with major coal miners, and none of them believe an export ban on coal is in the cards," noted an East Kalimantan-based miner.

"Considering that Indonesia's coal exports have recently hit record levels, with around 50 million tonnes expected for October alone, any potential export restriction on coal seems extremely unlikely," the miner added.

Statistics Indonesia (BPS) data showed that Indonesia exported 405.19 million tonnes of coal in the first nine months of this year, rising 8.4% from a year earlier, as reported.

China is the top buyer of Indonesian coal, with Indonesia's coal exports to China in January-September reaching 167.52 million tonnes, accounting for 41.3% of the total, according to the BPS data.

Indonesian President Prabowo Subianto is currently on a state visit to China until November 10, accompanied by Minister of Energy and Mineral Resources, Bahlil Lahadalia.

"It would be clearly unwise to issue a ban ahead of a state visit and risk offending a key buyer," commented a Shanghai-based industry analyst.

Meanwhile, Indonesian coal miners also dismissed the possibility that the government might require an increase in the washing rate for coal prior to exporting. "While washed coking or thermal coal has its own market, cost-effectiveness is still the priority," noted another Indonesian miner.

"About 90% of coal exports are loaded without washing," he said.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.