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[Sejong=Asia Economy Reporters Haeyoung Kwon and Sangdon Joo] Indonesia, the world's largest coal exporter, has banned coal exports for one month starting from the beginning of the new year due to domestic supply shortages, raising concerns that global coal prices will soar. Amid the global energy crisis marked by sharp increases in crude oil, liquefied natural gas (LNG), and coal prices, the Indonesian coal export ban adds to the instability in supply and demand for major coal-importing countries and could lead to further increases in other energy prices, increasing the burden on power generation companies.

On the 3rd, the Ministry of Trade, Industry and Energy held an emergency meeting of the 'Energy and Resource Supply Management Task Force (TF)' chaired by Deputy Minister of Energy Park Ki-young to review domestic energy and power supply and demand trends following Indonesia's coal export ban. The meeting was attended by presidents of five public power generation companies, the chairman of the Korea Power Exchange, the vice president of Korea Electric Power Corporation, global coal trader KCH Energy, and trade officials from Indonesia and China.

Indonesia is the world's largest coal exporter, having exported 400 million tons of coal for power generation last year, and is the second-largest coal supplier to Korea after Australia. Korea depends on Australia for 49% and Indonesia for 20% of its coal imports.

An official from the Ministry of Trade, Industry and Energy stated, "55% of Indonesian imported coal has already been shipped and is scheduled to arrive normally in Korea. Considering inventory levels and normal imports from other countries, the short-term impact on domestic power supply and demand is limited." However, the official added, "We are operating a 'Response Team for Indonesia Coal Export Ban' and will manage coal and power supply and demand in cooperation with related energy agencies and overseas missions to prepare for the worst-case scenario."

The government is closely monitoring domestic and international situations, considering the possibility of a prolonged crisis. The International Energy Agency (IEA) reported that coal demand reached an all-time high last year and is likely to continue this year. In this context, Indonesia's coal export ban could cause supply and demand instability centered on major importers such as China and India, potentially leading to a sharp rise in international coal prices. According to the Ministry of Trade, Industry and Energy, the price of Australian Newcastle coal doubled from $83.72 per ton on January 1 last year to $165.86 per ton on December 31. This could further fuel the coal price, which had surged to $235.55 per ton in October of the same year before declining. Previously, when Indonesia, which accounts for a quarter of the world's nickel ore supply, halted nickel exports in 2019, nickel prices surged, and there is a considerable possibility of a second nickel crisis repeating.

The coal export ban during the winter season, when power demand is high, is also a cause for concern. Although the government has stopped operating some coal-fired power plants to reduce fine dust in winter, 45 out of 53 plants are currently operating this month. LNG power generation is also running at full capacity, leaving little room for further expansion, according to the government. An official from the Ministry of Trade, Industry and Energy said, "Coal inventory is still sufficient for now, but we are also considering measures to secure additional inventory by limiting coal power output in case the situation prolongs."

Some speculate that India's coal export ban will be short-lived. It is analyzed that this measure came after local companies shifted coal to overseas exports priced at $90?100 per ton following Indonesia's domestic coal price cap of $70 per ton. However, since the Indonesian president has instructed a reduction in coal exports and the development of derivative industries since last year, the possibility of a prolonged ban cannot be ruled out.

An official from a public power generation company expressed concern, saying, "Power generation companies basically have long-term contract volumes and reserves, so even if Indonesia restricts exports for a month, there is no immediate impact on the power generation sector. However, we are closely monitoring the situation due to concerns about price increases and long-term supply instability caused by this export ban."

Park Ki-young, Deputy Minister of Energy at the Ministry of Trade, Industry and Energy, said, "Since the Indonesian measure occurred in January, when power demand is highest, a serious awareness and response are necessary." He urged, "Power generation companies should analyze the domestic impact of Indonesia's coal export ban and prepare thorough countermeasures for various scenarios." He also emphasized, "It is necessary to monitor the situation regarding intensified competition for coal procurement between countries, price increases, and the impact on power supply and demand in China and India."

This content was produced with the assistance of AI translation services.