Indonesian coal miners say buyers divert purchases due to unclear vessel rules

JAKARTA (Reuters) - Indonesian coal exports are being disrupted because the government has not issued technical guidance on the implementation of new shipping rules, an industry group said on Thursday.

Indonesia, the world's biggest thermal coal exporter, in 2018 issued regulations requiring its coal and palm oil exporters to use domestic insurance and shipping companies.

The insurance requirement was implemented last year and the shipping requirement will begin in May.

Most coal sales from Indonesia are under free-on-board contracts, so overseas buyers who are in charge of securing vessels are still waiting for the Trade Ministry to issue technical guidance, said Hendri Tan, a deputy chairman of the Indonesia Coal Miners Association (ICMA).

Some buyers, such as those from Japan, have started to divert their coal purchases to other countries due to the unclear protocol for vessel use, Tan said.

"This is no longer a threat, but something that already happened according to reports from our members," he said.

Hendra Sinadia, executive director of ICMA, urged the Trade Ministry to issue guidelines soon.

He said last year, the government issued the technical guidelines for the insurance rules, which included a list of eligible insurance firms, only one day before the deadline for implementation.

That had led to backlogs in ports.

He said any delays for vessel arrangements would have an even bigger impact for shipments.

Meanwhile, the group reiterated that the number of vessels operated by Indonesia companies was insufficient for the country's coal exports.

(Reporting by Wilda Asmarini; Writing by Fransiska Nangoy)