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Indonesia Scraps Plans for Ban on Lower-Quality Coal Exports

Jan. 23 (Bloomberg) -- 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

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