Indonesia's Coal Exports Increase Amid the Ukrainian 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.

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Russia, the world's third-largest coal supplier, dominates sales to Europe, but the Russian ban has disrupted supplies to the continent. Coal miner PT Adaro Energy Indonesia confirmed that it has shipped approximately 300,000 tons of coal to the Netherlands and Spain.

"Amid the conflict between Russia and Ukraine, we've started receiving demands from Europe," PT Adaro's chief financial officer Lie Luckman said, adding that it is possible that the European demand would increase even more.

Nevertheless, 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.

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 US$13.2 billion to state coffers, while Indonesia's total non-tax state revenue in 2021 was US$31.5 billion.