Coal news and updates

Indonesian coal exports may be impacted in Q4

October 30: The delay in getting export licence by miners and traders after introduction of a new system by Indonesia to curtail illegal mining activities with effect from October 1 this year is likely to impact overall exports from the country during the fourth quarter of 2014, experts in Indonesian told ICMW over telephone.

“We have to wait a few more days to find out the October export figures, but going by the current trend, it is expected that exports will come down in end-2014,” the experts believe.

“In the first week of October, there were a lot of complaints that miners were not getting the export licence,” they added.

Meanwhile, a section of the industry in Indonesia believes that exports would decline not only because of issues related to the registered export license system, but also because of low demand from China and a tendency among miners to hold their material in anticipation of firmness in prices.

“The new registered export licence, popularly known as ET came into effect from the beginning of October and so far it is understood that only a little more than 150 licences have been issued by its central government as of date though the regional governments had issued as many as 1,400 permits following a mining law introduced way back in 2009,” they said.

The registered export license system was started after the Corruption Eradication Commission in the country found anomalies in the country’s coal export and royalty collection figures, industry sources said.

Indonesia had introduced the system of export permits in 2009 under a new mining law in order to control export of illegally mined coal and other minerals which were affecting its royalty collections, experts said.

The Indonesian government felt the need for export licences since it was unable to track the exact production and export volumes of coal from the country, which in turn was affecting its revenue collections, sources said.

The export licences are issued by the country’s foreign trade ministry at the recommendation of the energy ministry. The permits are issued only after the trade ministry is satisfied that a particular miner or trader has met its royalty payment obligations after declaring the correct production figures.

“So far, the energy ministry has recommended issuance of 166 licenses, but the foreign trade ministry has issued slightly more than 150 licences,” the experts believe.

“We hear from shippers that delay in issuing the registered export licences was a deliberate effort as the government is taking the opportunity to control coal production, the market as well as small miners. Lesser number of mines will help it in monitoring and controlling illegal mining,” said another source.

Another source felt the delay is likely to continue for some time.

Meanwhile, trade sources in India said except normal disturbance in the middle of October due to cyclone Hudhud, that affected operations at ports like Vizag, Paradip, Gangavaram and Dhamra, which all lie on the east coast, imports of coal from Indonesia was by and large stable during the month so far.

Indonesia produces about 450 million tons of coal, 20-25% of which is consumed domestically while the rest is exported.