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Coal miners in Indonesia, the top shipper, are preparing for potential new curbs on exports, a move that would add pressure to prices already at record highs.

New restrictions on overseas sales are possible in either April or August — when mine output is typically lower — to make sure local power plants have sufficient supply, according to Pandu Sjahrir, chairman of the Indonesian Coal Mining Association.

“There is potential for a disruption like what happened in January,” Sjahrir said in an interview Tuesday. “We just assume they’re going to stop exports again.

Indonesia paused exports in January after about 20 power plants warned they faced shutdowns because of dwindling stockpiles and a squeeze on fuel supply. Coal prices surged in response, before shipments resumed in February.

Key coal prices have roared to new records this month as utilities in Europe, along with other major consumers, hunt for alternatives to cargoes from Russia following the invasion of Ukraine. Asia’s benchmark Newcastle coal price jumped 35% to a new record of $353.75 a ton on Friday, according to a weekly index compiled by IHS Markit and Argus.

Indonesia is the world’s biggest coal exporter by tonnage, followed closely by Australia, with Russia a distant third, according to the International Energy Agency.

Power plants can face supply shortages in periods of the year when coal output is crimped by factors including heavy rain, Sjahrir said. April is usually a low month for production, and this year it coincides with Ramadan, potentially further hampering output.

Indonesia requires coal producers to supply at least 25% of output to meet local needs and sets a ceiling price for coal sold to local power plants at $70 per ton, a policy known as the domestic market obligation rule.

The higher international coal prices rise, the more likely local miners are to sell the remainder of their output overseas, which will increase the chance of another export disruption, Sjahrir said.

Source: https://www.mining.com/web/indonesias-coal-miners-are-bracing-for-new-export-curbs/