Japan urges Indonesia to end coal ban

JAKARTA: Japan’s ambassador to Indonesia has called on Jakarta to end its recent ban on coal exports, which he said has had a “serious impact” on the world’s third-biggest economy.

Indonesia exports around three-quarters of its coal output, with the biggest markets including Asian economic powerhouses China, Japan, South Korea and India.

But on January 1 it banned shipments of the fossil fuel, saying it was to avoid outages after coal producers failed to set aside 25 per cent of output for the domestic market, as they were obliged to.

That sent global prices of coal higher as the northern hemisphere’s winter demand for energy peaks.

The “sudden export ban has a serious impact on Japan’s economic activities as well as people’s daily life”, Kanasugi Kenji wrote in a letter Tuesday to Indonesia’s Energy and Mineral Resources Minister Arifin Tasrif, which was confirmed on Wednesday by the embassy.

Japan imports around two million tonnes of coal a month from Indonesia, the letter said, adding that the grade of coal purchased by Japanese companies was higher than that burned by Indonesia’s power stations. Japan was not, therefore, a factor behind Indonesia’s coal shortages, he said.

“I therefore wish to request for the immediate removal of bans on coal export to Japan,” the letter read.

There were a few alternative sources to which Japan could turn, the letter said, urging a rapid end of the ban in “order to continue and maintain the cordial economic relationship” between the two countries.

The Indonesian government had said it would review the ban on Wednesday, but a planned meeting with representatives from the coal industry did not take place and no reason was given for the delay.

Indonesia requires coal producers to set aside 25 per cent of output for the domestic market, but caps the price at which it buys the fuel at $70 a metric tonne, far below global prices.

Since the ban, between 7.5 million tonnes and 13.9 million tonnes of coal had been diverted to domestic demand, according to the state power monopoly and media reports.

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