Coal traders face major shake-up under DSI's one-door export scheme

By Cepi Setiadi

The proposed implementation of a one-door coal export policy through state-owned PT Danantara Sumberdaya Indonesia (DSI) could significantly reshape Indonesia's coal trading landscape, reducing the role of traders in export markets while strengthening the country's bargaining position in global coal trade.

Yudhi Putro, Director of PT Kaldera Energi Nusantara (KEN), a coal supply company, said domestic coal traders and companies holding Transportation and Sales Licenses (IPP) would likely be among the parties most affected if DSI becomes the primary channel for coal exports. "Domestic traders and IPPs will be the most impacted because their business model will be eroded as DSI becomes the main export channel," Yudhi told Petromindo.com on Monday.

Under the proposed scheme, DSI is expected to act as a "super trader" by consolidating coal exports, which could substantially reduce the role currently played by traders in international markets. However, Yudhi noted that domestic coal trading activities are unlikely to be affected. He said the future export model could evolve into a business-to-business (B2B) framework supported by government-to-government (G2G) arrangements with state-owned power utilities in key export destinations, including China, India, Japan, South Korea and Southeast Asian countries.

"DSI is not just another SOE (state-owned enterprise), but rather an extension of the Indonesian government. It will negotiate directly on a G2G basis with state-owned power plants in those countries," Yudhi said.

Read also: Danantara seeks to reassure exporters as DSI begins oversight of strategic commodity exports

Currently, according to Yudhi, those state-owned power plants have been supplied by multiple international traders (including major global traders). With DSI acting as the government's arm, those multinational traders risk being cut off because G2G schemes prioritize direct government-to-government contracts, bypassing international middlemen. "In short, previously, foreign state-owned buyers sourced supply through global traders. Going forward, supply will come directly from DSI (Indonesia's SOE) via G2G. Global traders get sidelined," he said.

While the government's objective is to centralize exports, Yudhi said it remains unclear whether traders will continue to be involved in marketing activities and direct contract negotiations with overseas buyers. "We are still waiting for details regarding DSI's governance structure and business model. At this stage, it is too early to determine how the system will operate," he said.

Yudhi also cautioned that the one-door export mechanism could introduce additional layers of bureaucracy into the coal trading process. According to him, concentrating export decisions under a single entity may slow decision-making and create bottlenecks in commercial transactions. "Yes, it could become more bureaucratic. Decision-making may take longer and there is a risk of creating bottlenecks," he said.

Nevertheless, Yudhi acknowledged that one of the policy's primary objectives is to enhance Indonesia's pricing power in the global coal market by reducing fragmentation among exporters. He said a centralized export system could help prevent aggressive price competition among coal producers and traders, potentially supporting stronger export pricing. "The objective is to improve coal selling prices. Through a single export channel managed by DSI, there would be less fragmentation and less price undercutting among miners," he said.

To ensure market confidence, Yudhi stressed the need for a transparent pricing mechanism incorporating detailed calorific value benchmarks as well as bonus and penalty formulas based on coal quality specifications such as ash content, total sulfur (TS) and total moisture (TM). "There must be a detailed pricing reference for each calorific value range, supported by clear bonus and penalty formulas for coal quality parameters," he said. Regarding international buyers, Yudhi expects most customers to adopt a wait-and-see approach during the transition period.

He said existing contracts are likely to continue while buyers assess how the new system will be implemented. According to Yudhi, Danantara has indicated that existing contracts will be honored as long as there is no indication of under-invoicing or other irregularities. "Buyers will likely maintain existing contracts during the transition period and then adjust once the new system becomes clearer," he said.

Yudhi added that the risk of losing market share would be relatively low for low-calorific-value coal, particularly coal with calorific values of 4,200 GAR and below, where Indonesia remains the dominant global supplier. However, he warned that higher-calorific-value coal faces stronger competition from other producing countries.

"For coal with calorific values of 4,200 GAR and below, the risk is relatively small because Indonesia is the dominant supplier. For other grades, there is a risk because China and India can increase their domestic production," he said.

Despite concerns over implementation, Yudhi expressed hope that Indonesia's coal competitiveness would remain intact, provided DSI adopts a flexible and efficient governance framework. "We hope Indonesia's coal competitiveness will remain aligned with international market benchmarks, as long as the governance system is not overly rigid and bureaucratic," he said.

Editing by Reiner Simanjuntak