Drought in Indonesia disrupts thermal coal exports

The severe drought affecting Indonesia due to the Super El Niño has led to dropping river levels on Borneo Island. This situation, which causes disruptions in thermal coal exports, creates a chain reaction that increases the risk of power outages across Asia and could raise the cost of many consumer goods.

Water Levels in Borneo Rivers Are Dropping

Indonesia supplies approximately two-thirds of the thermal coal shipped to international markets, and a vast majority of this supply is extracted in two provinces on Borneo Island.

Transporting coal to ports relies on barge transportation via rivers, but decreasing rainfall threatens this logistics network.

Barges Are Forced to Reduce Their Loads

Satellite imagery of the Barito River clearly reveals that a significant portion of the riverbed is covered with sandbanks, making transportation difficult.

Due to shallow waters, barges are forced to reduce their loads to avoid the risk of grounding; this situation increases costs and slows down shipments.

Export Volume at a Five-Year Low

Some mining companies had to cancel shipments and declare force majeure due to uncontrollable adverse conditions.

While August export volume dropped to its lowest level in the last five years, local employers predict that this situation will significantly impact production.

Expected Risks for the Upcoming Period

The government officially announced that the rainy season this year will begin in November and be shorter than normal.

In the worst-case scenario, depleted rivers failing to refill could cause commercial disruptions to spill over into next year.