Indonesia lifts ban on coal exports on improving local supply

The Indonesian government has lifted a ban on coal exports, ending uncertainty that sent the price of the fuel to this year’s highest level.

The ban was lifted on improving supply for local power plants, according to a statement published by Energy and Mineral Resources Ministry on its website on Tuesday. Coal exporters that have met the domestic obligation requirement and have agreed to pay related fines can resume their shipments starting Feb. 1, it said.

Indonesia, one of the world’s top exporters of thermal coal, paused the exports in January to secure dwindling supplies for the plants that could have jeopardized 10 million residential and industry customers. The decision jolted markets and coal price jumped to $174 per metric ton on Jan. 4 from $148 at the end of last year. Uncertainty on when the government would end the restriction further sent the price to the highest level this year at $223 per ton on Jan. 25.

Under the domestic market obligation rule, the government requires producers to supply at least 25% of their output to meet local needs and sets a ceiling price for coal sold to local power plants at $70 per ton.