Indonesia May Allow Exports of Lower-Quality Power-Plant Coal

Indonesia, the world’s largest exporter of power-plant coal, may revise a government plan and allow lower quality coal to be exported after objections from miners, an official said. 

“We don’t want this rule to hamper investments although it’s aimed at increasing exports of higher-value coal,” Bambang Setiawan, director general of coal and minerals at the Energy and Mineral Resources Ministry, said today at a conference in Balikpapan, East Kalimantan province. “Investors are worried that they won’t be able to sell most of their output if the grade limit is too high.” 

Indonesia had planned to ban exports of the fuel with an energy value of less than 5,600 kilocalories a kilogram starting in 2014, requiring producers to upgrade the calorie if they want to ship it overseas, Witoro Soelarno, then secretary to the director general of coal and minerals at the energy ministry, said in January. 

The price of coal for sale in February with energy value below 5,600 kilocalories a kilogram was set from $63.34 to $95.62 a metric ton, according to data compiled by Bloomberg News. That compares with $127.05 a ton for coal with 6,322 kilocalories a kilogram of energy value. 

“It’s not an easy and cheap process to upgrade the calories,” Setiawan said. “We need to adjust the limit to give the producers the ability to sell their output without having to invest too much on technology upgrades.” 

The government’s main objective in setting the new rule is to increase revenue from coal exports and ensure sufficient supplies of the fuel for state utility PT Perusahaan Listrik Negara, he said. Source: Reuters