Indonesia May Ban Low-Quality Coal Exports From 2014

The Indonesian government plans to ban exports of coal with an energy value of less than 5,600 kilocalories a kilogram starting in 2014, an energy ministry official said.

Coal companies in Indonesia, the world’s largest exporter of the fuel after Australia, will be required to upgrade the heating value of so-called low-rank coal if they want to ship it overseas, allowing them to charge a higher price, said Witoro Soelarno, secretary to the director general of coal and minerals at the Ministry of Energy and Mineral Resources.

“We will release regulations later this year aimed at increasing the value added of our coal exports,” Soelarno told reporters in Jakarta today. “We have met with the coal mining association and they have agreed to the plan.”

The policy may help Indonesia, Southeast Asia’s biggest economy, boost export revenue and reach President Susilo Bambang Yudhoyono’s growth target of 6.6 percent on average through the remainder of his term ending in 2014. The country is targeting a 12 percent increase in this year’s exports to $168 billion, said Coordinating Minister for Economy Hatta Rajasa on Jan. 3.

The price of coal for sale this month with energy grades below 5,600 kilocalories a kilogram was set from $56.64 to $85.08 a metric ton, according to the energy ministry. That’s compared with a benchmark of $112.40 a ton for coal with calorific value of 6,322 kilocalories a kilogram.

Power Plants

The ban would also help state-owned utility company PT Perusahaan Listrik Negara secure supplies of the coal, which will account for about 32 percent of this year’s consumption of 50 million metric tons, said the company’s Primary Energy Director Nur Pamudji.

“We will need more low-rank coal when the additional 10,000 megawatts of power generators are completed in 2014,” Pamudji said by telephone from Jakarta.

The government plans to add about 10,000 megawatts of generation capacity through 2014 after a program to add 10,000 megawatts is completed in 2012.

Listrik Negara may more than double its coal demand to 95.3 million tons in 2015 from about 40.8 million tons last year as Indonesia increases its coal-fired power plant capacity to at least 19,167 megawatts, Pamudji said in May.

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