Indonesia's coal exports increase amid Russia-Ukraine conflict

The number of Indonesia's thermal coal shipments overseas is rising following Europe's ban on Russian coal amid the ongoing conflict in Ukraine.

Russia, the world's third-largest coal supplier, dominates sales to Europe, but the Russian ban has disrupted supplies to the continent.

Indonesia's second-biggest coal miner PT Adaro Energy Indonesia confirmed Monday that it has shipped approximately 300,000 tons of coal to the Netherlands and Spain, although a company official did not mention when exactly the shipments were made.

"Amid the conflict between Russia and Ukraine, we've started receiving demands from Europe," the company's chief financial officer Lie Luckman told local media on Monday. "It is possible that (demand) would increase."

Despite increasing demand from Europe, Luckman said the company is still focused on supplying coal to its main customers in Asia and has not considered revising its coal production target this year despite events in Europe.

This year, Indonesia aims to produce about 663 million tons of coal, with around 166 million tons for the domestic market and about 497 million tons for exports.

In January, Indonesia, the world's biggest exporter of coal used in electricity generation, temporarily banned coal exports to safeguard its domestic power supply.

Statistics Indonesia, a government institute, reported that coal exports in January plunged 61 percent compared to December last year. The government later eased the ban and allowed miners to sell coal overseas.

Given the global surge in thermal coal prices, Indonesia has introduced a higher coal royalty rate for miners to increase state revenues.

Last week, Indonesian President Joko Widodo signed new government regulation on coal tariffs, increasing the country's royalty rate for miners from a single tariff of 13.5 percent to a range of 14 to 28 percent, depending on the country's benchmark coal prices.

The mining industry is a significant contributor to Indonesia's non-tax state revenue.

Official information showed that last year miners in the country contributed 189.2 trillion Indonesian rupiahs (about 13.2 billion U.S. dollars) to state coffers, while Indonesia's total non-tax state revenue in 2021 was 452 trillion rupiahs (about 31.5 billion dollars).

Mamit Setiawan, executive director of Energy Watch Indonesia, a Jakarta-based think-tank, said Monday that the latest government regulation on coal tariffs would boost state revenues given the current high price of coal.