January 8, 2024

Indonesia and China strengthen coal investment and trade co-operation

The Indonesian Coal Mining Association (APBI-ICMA) and China Coal Transportation and Distribution Association (CCTDA) have signed a co-operation in a form of memorandum of understanding (MoU) to increase the 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 were in Jakarta.

This event was opened by remarks from the representatives of both parties, Peng Gang, the Director General of the Department of Asian Affairs, Ministry of Trade of the People Republic of China (PRC), followed by a speech from the Indonesian government which was delivered by the Coordinating Minister for Maritime and Investment Affairs, Luhut Binsar Pandjaitan. Additionally, the Ambassador of PRC to Indonesia, Xiao Qian, and Indonesian Ambassador to China and Mongolia, Djauhari Oratmangun, virtually witnessed this cooperation agreement as well.

The signing of the co-operation between APBI and CCTDA was also attended by APBI members who are the coal exporters to China, namely Adaro, Bukit Asam, Kideco, Indo Tambangraya Megah, Multi Harapan Utama, Berau and Toba Bara. In addition, representatives from the PRC Embassy, as well as China National Coal Association (CNCA), a Chinese coal mining association which also signed an MoU with APBI in Jakarta last year, were also seen in the meeting.

This co-operation was initiated by the government of the two countries, the Coordinating Ministry for Maritime and Investment Affairs since several months ago that had been exploring opportunities with the PRC government, facilitated by the Chinese Embassy in Jakarta. High-level direct meeting of representatives of the two government has been held some time ago in China as well. This effort is a concrete step of the Indonesian and Chinese government in celebrating the 70 years of diplomatic relations between the two countries.

The initiative from APBI aims to agree on a long-term supply policy for coal export. In addition, it is also to facilitate coal producers in Indonesia with buyers in China in terms of increasing the bilateral trade between the two countries.

In his speech, Pandjaitan appreciated this co-operation 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 emphasised that Indonesia is currently promoting the downstream programme, which is a step forward to help the economy and encourage the green energy. Therefore, this coal downstream policy can be used as an investment opportunity for investors from China who are known to be advanced in mastering the coal processing technology, including gasification.

In the MoU that was signed by APBI’s Chairman, Pandu Patria Sjahrir and his partner from CCTDA, Liang Jia Kun, they both 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 agreement is worth of US$1.46 billion.

As for the co-operation between APBI and CCTDA, there are a number of other important discussions, such as an agreement on the volume of Indonesia’s exports to China for 2021. Sjahrir also reminded that the principal of this co-operation in regards to the quantity of coal export’s target from Indonesia will be reviewed annually. In this co-operation, 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 and to China so that it will be a positive sentiment in supporting Indonesia’s national economic recovery.

Meanwhile, Djauhari Oratmangun, who participated in the event from China’s Hainan Province, explained that according to Chinese Customs’ data, Indonesia’s total exports to China for coal products, especially HS 2702, HS 2701 and HS 2704, for the January – September 2020 period reached US$4.9 billion, was decreased compared to the total exports in 2019 in the same period, amounting to US$ 5.8 billion. Even though this year there was a decrease due to weak demand because of the COVID-19 pandemic, he believes there are still many opportunities for cooperation between Indonesia and China in the coal sector that can be explored and developed continuously.

In a virtual event which was also attended by representatives from several national coal producing companies, Sjahrir appreciated the support from the government in encouraging trade and investment cooperation in the coal industry sector which is an industry that contributes significantly not only to the state revenue but also to national’s energy security. Through this co-operation, national coal producers are optimistic towards 2021, even though the global coal market is not expected to fully recover to the level of 2018 – 2019.

You are here: