Cement industry faces coal supply crunch

Indonesia’s cement industry is struggling to secure coal supplies, its primary fuel, amid tightening availability linked to delays in production quota approvals and reduced output levels, Kontan reported.

Coal is mainly used to fire rotary kilns that process limestone and clay into clinker, while combustion by-products such as fly ash are also used as additives in cement production.

The country’s installed cement capacity stands at around 119 million tons per year, while actual output ranges between 64 million and 67.8 million tons, implying a utilization rate of only about 55%–56%.

According to the Indonesian Cement Companies Association (Asperssi), coal stockpiles have continued to decline, with average supplies as of March 25 sufficient only until the third week of April. Several plants have already halted operations due to supply shortages and rising energy costs, including SBI Cement facilities in Cilacap and Tuban.

If supply constraints persist, more plants could be forced to stop operations, including facilities in Tuban and units operated by Conch in South Kalimantan and North Sulawesi.

Asperssi Chairman Lilik Unggul Raharjo said the shortages are partly due to delays in the approval of coal miners’ work plans and budgets (RKAB) for 2026 by the Ministry of Energy and Mineral Resources.

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 “The RKAB of coal companies that usually supply the cement industry has not yet been issued or approved by the government. This situation is further complicated by a recent directive prioritizing coal supply for power generation,” Lilik said on Tuesday.

Limited supply has also been exacerbated by allocation differences between state-owned and private cement producers, following the issuance of Government Regulation No. 39/2025 on mineral and coal mining.

 “Under the new regulation, technical guidelines have yet to be finalized. Based on the President’s directive, coal supply is prioritized first for companies serving public needs and second for state-owned enterprises,” he said.

President Director of PT Indocement Tunggal Prakarsa Tbk, Christian Kartawijaya, said private cement producers are still awaiting clarity on domestic market obligation (DMO) coal allocations.

 “We are still waiting for the DMO—hopefully we will get it. But we are also waiting to see what the next policy will look like. Any policy applied to the cement industry should be uniform for all players, both SOEs and non-SOEs, to ensure fair competition,” he said.

Some producers have turned to the spot market to secure coal at non-DMO prices, following global price trends, but this has increased production costs and pushed up cement prices.

 “For cement sales outside Java, prices have inevitably increased—on average by Rp2,000 per 50 kg bag,” Christian said.

Editing by Reiner Simanjuntak