Indonesia levies additional tariffs on coal shipments from Muara Berau port

Indonesia has imposed additional tariffs on ship-to-ship transport of coal cargoes from the Muara Berau port in Samarinda effective Oct. 1, according to a notice issued by the Indonesian coal mining association, seen by S&P Global Commodity Insights Oct. 5.

The notice by the association, APBI-ICMA, showed that an additional charge of 82 cents/mt for gearless vessels and 42 cents/mt for geared vessels has been imposed, a move market participants believe will likely impact supply from that particular port, which in turn may further increase prices.

Earlier, the tariff was around 80 cents/mt for geared vessels while gearless vessels were charged around $1.15/mt, a source from the association said, adding that this could be a little higher or lower depending on the size of the floating crane.

Platts, part of S&P Global Commodity Insights, assessed the FOB Kalimantan 4,200 kcal/kg GAR coal price at $59/mt on Oct. 5, up from $50.50/mt at the start of September.

The government has hired PT Pelabuhan Tiga Bersaudara, which manages the movement of ships at the said port, to centralize the process of tariff collection, multiple sources said. "Sellers will not be able to ship any cargo through the anchorage without paying the desired cost," an Indonesia-based trader said.

Several members of the mining association and floating crane operators have been holding protests against the move, sources said. "Almost 20 miners are currently protesting against the development," an Indonesian trader said.

Consequently, many loading operations have ceased from the port, which could intensify supply concerns in Indonesia where several miners are already waiting for the approval of their revised production quota for this year, two traders said.

A third Indonesian trader, however, said there could be a supply shortage only if the protests last for two weeks. "If the protests stop in 3-4 days, hardly any supply disruption will take place," the trader added.

Muara Berau, which is one of the biggest anchorages in Indonesia, accounts for nearly 90 million mt of total Indonesian exports per year, the notice stated. An India-based trader said that 40% of Indonesian coal comes through Muara Berau to India.

The issue, if not resolved, can lead to a significant supply crunch at a time when demand for coal is seen rising in the wake of India's renewed interest to replenish stocks for the upcoming festival season.

As a result of this development, the PT Multi Sarana Avindo mine located in East Kalimantan has issued a force majeure, according to a company notice seen by S&P Global. As per an Indonesia-based trader, the mine mostly produces coal of low- to mid-calorific value.

The development also comes at a time when the Indonesian spot market has witnessed a sudden uptick in prices, primarily on the back of a surge in demand from China for the upcoming winter, coupled with domestic supply constraints due to ongoing safety inspections at several domestic mines.