Buying coal for a power plant means balancing four things: the right quality for the boiler, the lowest cost per unit of energy, secure supply and clean contract terms. Get the quality wrong and efficiency drops and maintenance rises. Get the supply wrong and the plant may run short when it matters most.
This checklist covers what to look at before you sign.
1. Quality that fits the boiler
| Factor | Why it matters |
|---|---|
| Calorific value (with basis) | Decides how much coal you burn per MWh |
| Total moisture | Lowers boiler efficiency and adds freight weight |
| Ash | Wear, slagging, ash handling and disposal costs |
| Sulphur | SO2 emissions and corrosion |
| Volatile matter | Ignition and flame stability |
| HGI | Mill capacity and fineness |
| Ash fusion temperature | Slagging and fouling risk |
| Size and fines | Handling, dust and feeding |
See coal grades explained and how to assess coal quality.
2. Cost per unit of energy
Compare offers on delivered price ÷ net calorific value. Include freight, port charges, handling, ash disposal and the efficiency impact of the coal. The cheapest tonne is not always the cheapest megawatt-hour.
3. Emission limits
Check sulphur, ash and, if relevant, chlorine and mercury against your permit. Lower-sulphur coal can reduce scrubber costs or make compliance possible without one. See low-sulphur coal.
4. Supply security
- Is the origin stable, or exposed to policy changes, weather and logistics problems?
- Can the supplier deliver the full annual volume on schedule?
- Do you have a qualified second source?
In 2026 the IEA expects Indonesian exports to fall to about 495 Mt, and Colombia’s Cerrejón mine declared force majeure on 1 June. See how to secure a reliable coal supply chain.
5. Price index and contract terms
- Agree the index: ICI for Indonesian coal, Newcastle for Australian, Richards Bay for South African
- Set the adjustment formula for actual calorific value
- Define rejection limits, demurrage, laytime and force majeure
6. Delivery terms and logistics
Decide between FOB and CFR or CIF, and check your port’s draft, unloading rate and storage. Vessel size and loading method affect the delivered price.
7. Independent inspection
Require sampling and analysis by an independent inspector at loading, and agree which result is final if you also test on arrival.
8. A credible counterparty
Work with suppliers who can name the mine and loading port, accept inspection and use secure payment such as a letter of credit. Avoid offers that cannot be traced or that ask for upfront fees.
Buying Indonesian coal through Agromer
Agromer holds mandates for Indonesian thermal coal for power plants and industrial buyers. We work with an end-buyer LOI, payment by 100% DLC or SBLC, and SGS inspection at loading. Send us your boiler’s coal range, monthly quantity, contract length and discharge port. See coal suppliers for power plants and our Indonesian coal supply page.
Frequently asked questions
What is the most important factor when buying coal for power?
Matching the coal to the boiler’s design range, then comparing offers on delivered cost per unit of energy.
What calorific value do power plants need?
It depends on the boiler. Many Asian plants burn Indonesian coal between about 3,800 and 5,500 kcal/kg GAR; others are designed for 6,000 kcal/kg coal.
Why does moisture matter?
Moisture lowers the useful energy, reduces boiler efficiency and increases freight cost per unit of energy.
Which price index should a coal contract use?
Usually the index for the origin: ICI for Indonesia, Newcastle for Australia or Richards Bay for South Africa.
How can a plant reduce supply risk?
By qualifying a second source, using term contracts, holding adequate stock and inspecting every cargo.
What payment terms are common?
Documentary letters of credit, with payment against shipping and inspection documents.