Indonesia Caps Domestic Coal Price for Cement, Fertilizer Plants
(Bloomberg) -- Indonesia, the largest exporter for thermal coal, is placing a limit to the price of coal sold to local cement and fertilizer plants to help them weather the impact of surging global prices.
The price is set at $90 a ton for coal with a gross heating value of 6,322 kilo calories a kilogram, Ridwan Djamaludin, director general of minerals and coal at the Energy and Mineral Resources Ministry, said by text message on Thursday. The relevant ministerial decree has been issued.
The price intervention follows moves by authorities in China to cool gains in coal prices and help ensure power producers can profitably raise electricity generation to help avoid further power shortages. Thermal coal futures in China have slumped about 50% since hitting a record on Oct. 19 as a result of the actions.
Surging global demand has driven a 200% increase in Indonesia’s benchmark coal price over the past year to $161.63 a ton in October.
The price cap is effective from Nov. 1 until March 31, 2022, and the government will evaluate the level in line with any development, Djamaluddin said. A similar policy has been in place for local electricity producers since 2018.
Miners will comply with the limit and remain committed to supplying the local market, Hendra Sinadia, executive director at the Indonesian Coal Mining Association said in his response to the new policy on Thursday.
©2021 Bloomberg L.P.