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Maguire: Indonesia's coal-export ban will shake up Asia's energy mix.

Utilities in Asia are scrambling for a solution to a possible shortage of critical coal after Indonesia, the world's top coal producer, halted exports to protest government plans to limit production.

A?indonesian coal miner said that long-term contracts will be maintained but spot shipments "will be limited until a decision is made on government quotas." Officials warned that some contracts, even those with a term, could be at risk due to unforeseen circumstances.

Indonesia is the largest coal exporter to China, India and Vietnam, as well as the Philippines.

Indonesia's government has proposed production cuts and quotas to increase export prices and revenue.

Indonesian mining companies have also threatened to lay off workers and close mines in response to any forced production cuts. This has put pressure on the government to find a compromise to avoid a complete shutdown of mining and exports.

The authorities have shown willingness to "play hardball" with the mining industry before and temporarily suspended coal exports due to a lack of coal at local power stations in 2022.

The latest intervention has already led to a 9% increase in benchmark futures for Asian seaborne thermal coke, the highest level in more than a year.

As key importers try to secure replacement supplies from other exporters or trading houses, further price increases in the global coal market are likely.

WIDE SPAN

Data from commodities intelligence firm Kpler indicates that 16 different countries imported at least 1 million metric tonnes of Indonesian thermal coke in 2025.

This group of countries includes the top coal-consuming nations in the world, from Brunei and China to other nearby countries.

Some countries, such as China and India, are more dependent on Indonesian coal than others.

Several Southeast Asia and South Asia countries are dependent almost exclusively on coal imports and use coal to generate electricity.

Further, any sustained decline in Indonesian coal volumes on the global markets will have far reaching impacts as Asian utilities, which depend on coal to produce over half their electricity, are already under pressure from regional heating demand.

In a Pinch

Philippines, Bangladesh and Vietnam, as well as Malaysia, are the most likely to be affected by the Indonesian coal disruption.

According to Kpler, the Philippines will be the most import-dependent buyer for Indonesian coal by 2025. It is estimated that it will import 98% of all its coal from Indonesia.

Data from the energy think tank Ember show that coal was the leading source of electricity for the Philippines last year. It accounted around 57% of the utility's electricity output.

Last year, Bangladesh imported more than 90% its coal imports from Indonesia. The coal share in its electricity mix reached record highs.

In?2025 Malaysia and Vietnam will import more than half their annual coal from Indonesia. They also depend on coal to provide 40% or more their electricity needs.

FARTHER AFIELD

Due to the configuration of coastal power plants, any prolonged stoppage in Indonesian coal exports would have an impact on markets that are less dependent on imports such as China and India.

Many of the major coal-fired plants in China or India are located near major bulk commodity ports. They therefore source their coal from overseas suppliers, rather than the domestic market.

If the international coal market rallies, these power plants will be able to source more coal on the domestic market. However, they may incur higher transport costs because trucks and rail systems would replace bulk vessel deliveries.

This means that, even though the Philippines and Bangladesh are likely to be the first utilities to react to Indonesia's export ban, all coal plants will be affected as the markets begin to price in volume reductions from the world's largest supplier.

These are the opinions of a columnist who writes for.

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(source: Reuters)