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Indonesia reviewing rules mandating coal sales to local buyers - official

12/02/2019 | 03:33am EDT

Indonesia is reviewing rules that require coal miners to sell a portion of their coal to local buyers, a government official said on Monday, as suppliers struggle to meet the regulation.

Coal miners are currently required to sell 25% of their output to the local market, mainly state-owned electric company PT Perusahaan Listrik Negara (PLN), a policy known as the domestic market obligation (DMO). However, since PLN's demand is limited while output is climbing, the miners are unable to maintain the ratio of exports to domestic sales.

"We are thinking of ways to avoid harming the domestic sector, but still takes care of exports," said Bambang Gatot Ariyono, coal and minerals director general at the Ministry of Energy and Mineral Resources, said at a ministry event.

The changes are aimed at "finding the balance between domestic obligation and exports," he said.

Pandu Sjahrir, the chairman of the Indonesian Coal Mining Association, told reporters separately on Monday that domestic coal consumption remains unchanged at 120 million tonnes a year while output is climbing to 600 million tonnes.

If the government wants to keep the 25% DMO, output should be capped at 480 million tonnes, he said.

Some miners have also complained that they cannot sell to domestic buyers because they require low-calorie coal while the miners mostly produce high-calorie coal, local media reported.

Sjahrir also said he hopes the government will remove the price cap for coal sold to PLN, currently set at $70 per tonne.

Indonesia's Energy and Mineral Resources Minister Arifin Tasrif said last month the government plans to keep the price cap at $70 for 2020.

Ariyono also said the government will also draft new regulations to support its agenda of building a downstream industry for coal.

Indonesian President Joko Widodo wants the country to expand the downstream uses for coal at home, including processing coal into dimethyl ether to substitute for imported liquefied petroleum gas (LPG).

(Reporting by Wilda Asmarini; Additional reporting by Bernadette Christina Munthe; Writing by Fransiska Nangoy; Editing by Christian Schmollinger)

Stocks treated in this article : The 600 Group PLC, Mineral Resources Limited

ę Reuters 2019
Stocks mentioned in the article
ChangeLast1st jan.
AMP LIMITED -0.93% 1.065 End-of-day quote.-31.73%
AT HOME GROUP INC. -0.08% 36.99 End-of-day quote.0.00%
DRAFT INC. -1.03% 863 End-of-day quote.-25.99%
MINERAL RESOURCES LIMITED -0.33% 61.16 End-of-day quote.63.31%
NEXT PLC -1.47% 7916 Delayed Quote.13.43%
THE 600 GROUP PLC 0.89% 14.125 Delayed Quote.49.33%
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