Indonesia Says May Allow Coal Exports Resumption By Tuesday

COAL - JAKARTA. Indonesia's government may allow coal exports by Tuesday, a senior minister said on Monday, as pressure mounts on the world's biggest thermal coal exporter to end a ban imposed at New Year.

The suspension, which came after state power utility PLN reported critically low inventory levels of the fuel, sent global coal prices higher last week and prompted calls by Japan, South Korea and the Philippines for it to be eased.

"End of today or tomorrow we can release some of the big vessels," Coordinating Minister of Maritime and Investment Affairs Luhut Pandjaitan said in an interview with CNBC on Monday.

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Energy Minister Arifin Tasrif had earlier on Monday told Japan's industry minister Koichi Hagiuda that he hoped Indonesia may come to a decision in the coming days.

Hagiuda said Japanese companies wanted clarity from Indonesia.

"Also, there are some Japanese ships that have already been loaded (with coal), so if it takes time to make an adjustment," he said.

"We would like to ask you to at least allow those ships to leave for Japan."

Japan's embassy in Jakarta last week asked Indonesia to exclude from the ban high-calorific coal, which is not used by domestic power plants.

Although authorities have said the coal supply emergency was over at PLN, the government has said other issues needed to be addressed before lifting the ban.

Discussions were expected to resume on Monday, focusing on logistics issues, industry officials told Reuters.

Shipping companies were working to reach the best solution to meet PLN's coal demand, said Carmelita Hartoto, chairperson of Indonesia Shipowners Association.

A PLN spokesperson did not immediately respond to a request for details on its latest supply situation.

SOLUTION SOUGHT

Pandu Sjahrir, chairman of Indonesia Coal Miners Association (ICMA), said PLN is estimated to have 10 days of coal supply.

The power company has said it had secured 13.9 million tonnes of coal but wants 20 million tonnes to reach a 20-day inventory level for its power plants.

"We are ready to supply coal for the amount that PLN wants," Pandu said.

"The issue now is about shipment, but there should be a solution for this soon."

Fabby Tumiwa, executive director at the Institute for Essential Services Reform (IESR), an energy think tank, said transporting coal to power plants could take up to 10 days, but during wet periods such as January, loading alone could take up to four days, depending on vessel size and infrastructure.

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Fabby said smaller miners face risks of their coal not meeting the specifications of PLN, which has no coal blending facility.

"It is risky to ship their coal only to be rejected by PLN. They also cannot use small barges if they want to ship to PLN's plants in Java and Sumatra," Fabby said.

"They need larger vessels, which mean they need to wait for their coal to be pooled together ... It is a complicated logistic challenge."

Meanwhile, Minister Luhut said Indonesia was drawing up a new pricing structure for the so-called Domestic Market Obligation (DMO), where miners are required to sell 25% of their output to the local market with a maximum price of $70 per tonne for power generators.

"DMO is not going to be an issue anymore because we're going to make a new structure where PLN should buy at market price," he said.