Good News – Coal
While we don’t often mention coal in our CE notes, it is the globe’s primary source of material for energy production and recent issues facing China and a number of other countries that have begun to limit the exportation of coal to prevent shortfalls at local power-generating facilities, have brought the material to the forefront in recent months. In particular, Indonesia, the largest producer of thermal coal, issued a ban on coal exports, which began on January 1, when the country’s mines failed to meet a government requirement that 25% of their annual production must go to the state-owned electric company PT PLN at a maximum price of $70/ton. While the Indonesian government indicated that it is also reviewing export restrictions on other mineral resources, with indications that copper and bauxite (85% of bauxite is converted to aluminum) are among the one being considered, no determination on these materials has been noted thus far, with Indonesia being the world’s 6th largest copper exporter in 2020 with a 4.2% share and the 5th largest bauxite exporter last year.
But the good news is that the country has started easing the coal restrictions for those local companies that have met their domestic market obligations, allowing 75 ships to load coal from complying companies while 12 more ships have been allowed to load under written assurances of compliance and penalties from others being closely monitored. The coal stockpiles at Indonesian power generation plants has now reached 20 days, which the government finds is enough to maintain consistent operation. The original ban pulled the mining licenses of over 2,000 producers, many of whom had been lax about meeting government imposed requirements, but the release of the ban, at least in part, is a welcome relief for a number of countries that are large coal importers and rely on Indonesia to supply same, such as the ones shown below.
But the good news is that the country has started easing the coal restrictions for those local companies that have met their domestic market obligations, allowing 75 ships to load coal from complying companies while 12 more ships have been allowed to load under written assurances of compliance and penalties from others being closely monitored. The coal stockpiles at Indonesian power generation plants has now reached 20 days, which the government finds is enough to maintain consistent operation. The original ban pulled the mining licenses of over 2,000 producers, many of whom had been lax about meeting government imposed requirements, but the release of the ban, at least in part, is a welcome relief for a number of countries that are large coal importers and rely on Indonesia to supply same, such as the ones shown below.
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