China is aiming to expand thermal coal imports from Indonesia in 2021 after the fossil fuel trade has been affected by the COVID-19 this year, according to a recent agreement signed by the two countries.
On November 25, the Indonesian Coal Mining Association (APBI) signed a Memorandum of Understanding with China Coal Transportation and Distribution Association (CCTDA) during a virtual "China-Indonesia Coal Procurement Matchmaking Meeting".
Under the MoU, signed by APBI's Chairman Pandu Patria Sjahrir and his counterpart from CCTDA, Liang Jia Kun, China will buy thermal coal worth $1.46 billion from Indonesia next year.
The period of this agreement will last three years. The quantity of coal export's target from Indonesia will be reviewed annually, according to Chairman of APBI, Pandu Sjahrir.
"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," said APBI in a press statement.
In this cooperation, APBI said, it's also necessary to establish a price index that can be negotiated regularly as a reference price for coal imports to China from Indonesia.
Indonesia, with advantages of shallow-buried resources, lower mining costs and convenient transport conditions, has become the top exporter of thermal coal in the world. China is its largest thermal coal buyer.
Indonesia is trying to step up coal exports to other countries around Southeast Asia, Vietnam in particular, as China is gradually containing its seaborne coal imports in recent years under the pressure of environment protection and performance of domestic producers.
In the first ten months, China's coal imports from Indonesia totaled 110.26 million tonnes, compared with 128.65 million tonnes over the same period a year ago, China's customs data showed.
Analysts, however, estimated Indonesia would take a bigger share in China's coal imports in the few years to come as Australia, the second coal supplier to China after Indonesia, has almost lost its foot in the Chinese market amid repeated spats between the two in some international affairs.
Early last month, China blacklisted coal imports from Australian and the embargo seemed to continue if the two countries couldn't reach a consensus in improving the bilateral relation.
China's imports of Australian coal were 2.52 million tonnes last month, compared to 6.37 million tonnes in October 2019, Chinese customs data showed.
(Writing by Alex Guo Editing by Harry Huo)
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