The Indonesian government has banned coal exports in January 2021 to avoid risks of domestic shortage for the power sector and potential blackouts. Under a domestic market obligation (DMO), the country, which relies on coal-fired power generation (62% of its power mix), forces coal miners to supply 25% of annual production to the state-owned power utility PT Perusahaan Listrik Negara (PT PLN) at a maximum price of US$70/Mt, around half of the current global market price. In addition, Indonesia requires power plants to maintain a 20-day coal supply of around 5.1 Mt in total. As local coal miners only met less than 1% of the required supply on 1 January 2022, the country decided to prohibit coal exports in a bid to prevent a possible widespread blackout.
The DMO was introduced in the Law on Mineral and Coal Mining (2009). Since 2018, DMO sales represent about 25% of domestic production and the price cap for sales to domestic power plants has been set at US$70/t for coal over 6 000 kcal/kg (43 US$/t between 4 500 and 6 000 kcal/ton, and 37 $US/t for less than 4 500 kcal/kg). Previously in August 2021, the Indonesian authorities already suspended export authorisation for several coal mining companies, which failed to meet their DMOs. Indonesia is the third-largest producer of coal and lignite worldwide with an output of 551 Mt in 2020. The country is also the world's largest coal exporter with sales of 412 Mt in 2020.
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