Indonesia, one of the world’s top exporters of thermal coal, is pausing exports of the fuel in January to secure dwindling supplies for domestic power plants.
The month-long halt is needed to prevent shutdowns at about 20 power plants in Java, Madura, Bali and other regions, the energy and mineral resources ministry said in a statement posted on its website. The lack of supply could have affected 10 million residential and industry customers.
Out of 5.1 million tons of coal supply to power plants assigned by the government, only 35,000 tons or less than 1% were delivered as of Jan. 1.
The world’s biggest exporter of thermal coal on Saturday 1st January 2022 banned the shipments because of concerns it could not meet its own power demand. But the prohibition risks undermining the energy needs of global economic linchpins China, India, Japan, and South Korea, which together received 73% of Indonesian, coal exports in 2021.
Prices for coal to India’s west coast climbed by as much as 500 rupees ($6.73) per tonne since the ban was announced a few days ago, said Riya Vyas, a business analyst at iEnergy Natural Resources Limited.
The ban follows a tumultuous year for global coal as prices surged amid a supply crunch in China, the world’s biggest consumer. Prices of the most commonly exported grade of Indonesian coal rose to a record $158 per tonne in October
One of the immediate effects of this halt in coal exports was a rise in the price of coal on the world markets but more worrying for NZ would be the effect of any long term shortage in global supply.
Last year we had to import approximately 1.1 million tonnes of coal to keep the Huntly power station going as without this imported coal the lights would have gone out in many parts of the country.
Currently we don’t have to worry as the hydro lakes are full and we have plenty of energy to drive the power plants that produce our electricity, but what happens when the season becomes long and hot, the dams get low water levels, natural gas supplies runout and we either can’t get a supply of coal or afford to pay the current prices for it.
That’s when we feel the true effects of this government’s, rash decisions around converting to electricity for heating and industrial processes without factoring in any alternatives for security of supply; their decisions to ban exploration for oil and gas and to stop mining and using coal.
With the government’s decisions to replace the use of fossil fuels with electricity in industrial processes, heating, and transport there will be a huge upswing in demand for electricity going forward into the near future and this current situation where the supply of coal is restricted, may just be a forerunner to what we can expect on a regular basis.
The plain fact is that without the use of thermal power generation from either coal fired or gas fired power stations within New Zealand, the lights will regularly go out as demand will rapidly exceed supply.
Andy Loader