China to increase Indonesian coal imports

(Posted on 30/11/20)

The Indonesian Coal Mining Association (APBI-ICMA) and CCTDA (China Coal Transportation and Distribution), have signed a collaboration to increase coal exports from Indonesia to China. This agreement was carried out in the "China-Indonesia Coal Procurement Matchmaking Meeting" which was held virtually, where the Chinese delegation attended the event in Nanning city, Guangxi Province while the Indonesian delegation was in Jakarta.

The event was opened by remarks from representatives of both parties. First by Mr. Peng Gang, Director General of the Department of Asian Affairs, Ministry of Trade of the PRC, then a speech from the Indonesian government was delivered by the Coordinating Minister for Maritime Affairs and Investment, Luhut Binsar Pandjaitan. In addition, the Ambassador Extraordinary Plenipotentiary of PRC to RI Mr. Xiao Qian, and the Indonesian Plenipotentiary Ambassador to China and Mongolia Djauhari Oratmangun, who virtually witnessed this cooperation agreement.

The signing of the collaboration between APBI and CCTDA was also attended by APBI members who are coal exporters to China, namely Adaro, Bukit Asam, Kideco, Indo Tambangraya Megah, Multi Harapan Utama, Berau and Toba Bara. Also attending were representatives from the PRC Embassy, ??as well as CNCA (China National Coal Association), the Chinese coal mining association which also signed an agreement with APBI in Jakarta last 2019.

This collaboration was initiated by the governments of the two countries in which the Coordinating Ministry for Maritime Affairs and Investment of the Republic of Indonesia has since several months explored opportunities with the PRC government, facilitated by the Chinese Embassy in Jakarta. High-level direct meeting of representatives of the two governments has also been held some time ago in China. This effort is a concrete step of the Indonesian and Chinese governments in celebrating 70 years of diplomatic relations between the two countries.

This initiative from APBI aims to agree on a long-term supply policy for coal exports. In addition, it is also to facilitate coal producers in Indonesia with buyers in China and increase bilateral trade between the two countries.

In his speech, the Coordinating Minister for Maritime Affairs and Investment appreciated this collaboration as one of the steps in the context of Indonesia's economic recovery after the impact of the Covid-19 pandemic. Coordinating Minister Luhut also emphasized that Indonesia is currently promoting the downstream program, which is a step forward to help the economy and encourage green energy. So that this coal downstream policy can be used as an investment opportunity for investors from China who are known to be very advanced in mastery of coal processing technology including gasification.

In the collaboration signed by the Chairperson of APBI Pandu Patria Sjahrir and his partner from CCTDA Liang Jia Kun agreed to sign a coal contract purchase for 2021, and committed to implementing the contents of the contract. The period of this cooperation itself lasts for 3 years. The value of the agreement between the companies that were present at the signing of the cooperation was worth USD 1.46 billion or IDR 20.6 trillion, which is part of an agreement to increase cooperation between the two countries to achieve a coal trade volume of 200 million tonnes by 2021.

As for the collaboration between APBI and CCTDA, there are a number of other important discussions such as an agreement on the volume of Indonesian exports to China for 2021. The Chairperson of APBI, Pandu Sjahrir also reminded that in the main cooperation related to the quantity of coal export targets from Indonesia, it will be reviewed annually. In this cooperation, it is also necessary to establish a price index that can be negotiated regularly as a reference price for coal imports to China from Indonesia. This agreement is expected to provide benefits for coal industry players in the certainty of coal exports to Indonesia to China so that it will be a positive sentiment in supporting Indonesia's national economic recovery.