APBI warns of economic risks from sudden coal policy changes

By Cepi Setiadi

The Indonesian Coal Mining Association (ICMA-APBI) has underscored the strategic role of coal in Indonesia’s energy security and economy, while warning against abrupt policy shifts that could disrupt the industry and regional stability.

Speaking at an Energy Discussion hosted by Energy and Mining Editor Society (E2S) on Wednesday, APBI Chairman Priyadi acknowledged the dual narrative surrounding coal. While it remains a key contributor to state revenue and energy supply, the industry continues to face environmental criticism.

“Coal is often positioned as a pillar of energy security and a source of foreign exchange. Yet, at the same time, it is heavily criticized as a dirty energy source. That is something we have to accept,” he said.

Despite the pressure, Priyadi maintained that coal remains competitive compared to other energy sources, particularly given Indonesia’s abundant reserves. He cited national coal reserves of around 39 billion tons and resources of 96 billion tons, suggesting that the figures could be even higher under current market conditions.

Priyadi also highlighted coal’s potential role in supporting domestic energy independence, noting that its utilization does not depend on global supply routes such as the Strait of Hormuz. “We can rely on our own coal resources to generate electricity and potentially electrify more sectors,” he added.

However, he stressed that the industry’s long development cycle makes it vulnerable to sudden regulatory changes. Coal mining projects, he noted, are based on long-term planning, including feasibility studies, environmental approvals, and mine life projections. “As soon as there are abrupt restrictions or cuts—such as sudden adjustments to RKAB—it becomes very challenging for the industry,” he said, referring to miners’ Work Plan and Budget.

Read also: APBI sees moderate coal prices as supply risks cap gains

The Ministry of Energy and Mineral Resources has sharply reduced the 2026 RKAB coal production quota to 600 million tonnes from last year’s realized output of 790 million tonnes. Starting this year, RKAB validity has also been shortened to one year, from the previous three-year period. In addition, the government has increased the domestic market obligation (DMO) requirement to 30% from 25% to secure domestic supply, and is considering an export tax to boost state revenue.

Priyadi warned that such policy shifts could trigger significant multiplier effects, particularly on employment. He revealed that some companies and contractors had already considered layoffs affecting thousands of workers following recent regulatory uncertainties. “The coal industry relies heavily on contractors, and risk-sharing is part of the business model. But sudden policy changes could lead to widespread layoffs,” he said.

Beyond employment, he emphasized coal’s role in regional development, particularly in remote areas where mining activities have helped improve infrastructure and accessibility. He cautioned that disruptions to mining operations could negatively impact local economies that depend heavily on coal-related revenues.

“There needs to be an integrated assessment in policymaking. The impact is not only on state revenue, but also on regional economies and social stability,” Priyadi said.

He also noted the cyclical nature of the coal industry, which has been influenced by global events such as conflicts and the COVID-19 pandemic. While coal prices tend to rise during periods of geopolitical tension, Priyadi stressed that the industry does not benefit from such conditions in a broader sense. “We do not expect wars to happen just because coal prices increase,” he said.

Looking ahead, Priyadi pointed out operational challenges, including reliance on fuel for heavy equipment, even as some segments begin adopting electric vehicles. At the same time, restrictions on new coal-fired power plants (PLTU) add further complexity to the industry’s outlook.

He concluded by reiterating the need for careful and consistent policymaking to avoid unintended socio-economic consequences, particularly in coal-dependent regions.

“If unemployment rises in mining regions, it could lead to broader social issues, including instability and increased crime. This is something we must anticipate together,” he said.

Editing by Reiner Simanjuntak