The deal allows China to import coal from Indonesia for three years, effective from 2021


Indonesia and China sign MoU to strengthen coal investment. (Credit: Ben Scherjon from Pixabay)

The Indonesian Coal Mining Association (APBI-ICMA) has signed a memorandum of understanding (MoU) with China Coal Transportation and Distribution Association (CCTDA) to sell $1.467bn worth coal to China.

The MoU, which is aimed to strengthen coal investment and trade cooperation, has been signed during the “China-Indonesia Coal Procurement Matchmaking Meeting” which was held virtually.

As per the terms of the MoU, China will import coal from Indonesia for three years, effective from 2021.

In a press statement, APBI said: “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 and to China so that it will be a positive sentiment in supporting Indonesia’s national economic recovery.”

Indonesian Coordinating Maritime Affairs and Investment Minister Luhut said that the country’s cooperation with China is one of the steps in its economic recovery from the Covid-19 pandemic.

Luhut said that Indonesia is promoting the downstream programme to encourage green energy.

According to Chinese Customs data, the country’s import of Indonesia coal products decreased during the period January-September 2020 reaching $4.9bn, compared with $5.8bn worth of total exports in the same period in 2019.

Indonesian Ambassador to China and Mongolia Djauhari Oratmangun believes there are many opportunities for cooperation between Indonesia and China that can be explored and developed in the coal sector despite a decrease in coal demand due to the Covid-19 pandemic.

APBI said that the national coal producers, through this cooperation, are optimistic about next year, although full recovery of the global coal market is not expected to the level of 2018-2019.