The Indonesian government lifted its ban on coal exports late on Thursday. As expected, permission to resume selling coal abroad was granted only to mining companies that met their domestic market obligations by selling 25% of their 2021 coal production volume to state utility Perusahaan Listrik Negara (PLN). Coal industry sources told TradeWinds that the first phase of the ban’s lifting covered the majority of the large coal producers that dominate the export trade, although traders who source their coal from a variety of smaller mines that did not meet their domestic coal quotas in 2021 are still prohibited from exporting.

An official joint circular issued by three government ministries seen by TradeWinds indicated that 37 foreign-flagged bulk carriers that were loaded with coal from approved companies are allowed to depart Indonesian territorial waters. A further 18 bulkers were listed as loading coal supplied by approved producers Adaro Indonesia, Borneo Indobara, Kideco Jaya Agung, Multi Harapan Utama, Marunda Graha Mineral, Granda Alam Makmur, and Bina Insan Sukses Mandiri. However, a further 16 bulkers that were either loaded or loading coal supplied by companies that did not meet their domestic market obligations will not be allowed to depart, at least not for now.

The export ban, which was implemented with almost no notice on 1 January is believed by brokers and shipping agencies to have tied up in the region of 200 panamax and supramax bulkers that were either loaded, loading, or awaiting loading on 1 January, or had arrived at the loading port on the days following the ban. Other bulkers are reported to have diverted to Australia or South Africa as coal buyers sought urgently needed coal supplies elsewhere.

While Indonesian politicians are crediting the ban for resolving PLN’s acute coal shortage, it has also led to a major shakeup at PLN, which has seen several top executives replaced. The fallout from the ban has also hit the country’s coal sector, with the government cancelling the operating licenses of more than 2000 small coal producers who had neglected their domestic quotas and were found to have breached other regulations.

Indonesia exports about 400 MMT of coal in a year, and with half of January exports removed from the market, many shipping sources involved in the country’s coal sector expect that it will take weeks, if not months for the backlog of exports and waiting vessels to clear.

They expect that there will be a high number of maritime disputes between owners, charterers and shippers over demurrage costs and cancelled fixtures due to Force Majeure having been declared by many mines and shippers.