Workers walk near a vessel carrying coal at a port in Palembang, Indonesia, Jan. 4. Reuters-Yonhap

Korea calls on Indonesia to resume coal exports

By Baek Byung-yeul

The global economy is being affected once again by resource nationalism, which has reared its head since the beginning of the new year with mineral-rich countries closing their doors to exports and asserting control over their raw materials. This comes as a significant threat to Korea, which is heavily dependent on imports of natural resources to meet its energy and production needs.

The energy resource crisis stems from multiple factors, such as supply chain disruptions caused by the U.S.-China trade row, the impact of the COVID-19 pandemic and the growing carbon neutrality trend which has increased the cost of metals and minerals that are essential for producing solar power, wind power, electric vehicles and other renewable energy technologies.

Experts said that countries with abundant resources will increasingly pursue more nationalistic strategies to exercise control over resources in 2022 and those suffering from a lack of raw materials like Korea should come up with measures to secure a stable supply of energy resource materials, such as helping private companies actively seek overseas resource development projects.

On Dec. 31, the Indonesian government announced it was banning coal exports for a month as supplies at its domestic power plants fell to critically low levels, which consequently raised risks of blackouts.

The decision to ban exports of the mineral stemmed mostly from China's increasing dependence on Indonesian coal after the world's second-largest economy stopped buying coal from Australia, amid strained diplomatic relations with the key U.S. ally.

Indonesia accounts for 20 percent of Korea's total coal imports followed by Australia and concerns are growing over a disruption in the country's power generation capacity.

An official from a local power plant company said that the export ban would have a negative impact in the long term resulting in a hike in coal prices.

"In the short term, there is no significant impact as we have enough inventory. But in the long run, coal prices may rise or there may be changes in supply, so we are keeping an eye on the situation," the official said.