Indonesia Scraps Plans for Ban on Lower-Quality Coal Exports

Indonesia, the world’s largest exporter of thermal coal, won’t proceed with a law intended to lift prices by banning the sale of lower-quality grades.

“If we applied the regulation, it will stop mining activity,” Edi Prasodjo, coal-business director at the Energy and Mineral Resources Ministry, said in a Jan. 18 interview. “Miners won’t be able to export the fuel, as technology for upgrading low-rank coal isn’t available. They can’t sell to domestic buyers as demand isn’t big enough.”

The ministry had drafted a decree to prohibit the export of coal with a heating value of less than 5,700 kilocalories a kilogram on an air-dried basis, according to a copy of the proposal on the ministry’s website. Miners would have been forced to upgrade the heating value of the fuel if they wanted to ship it.

Medium and low-rank coal accounted for 93 percent of Indonesia’s reserve of 28 billion metric tons in 2011, according to Prasodjo. Sub-bituminous coal and lignite have higher moisture levels and a lower carbon content, reducing the heating value compared to better-quality stock.

To contact the reporter on this story: Fitri Wulandari in Jakarta at fwulandari@bloomberg.net

To contact the editor responsible for this story: Mike Anderson at manderson34@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.