Coal industry warns of fallout as government plans 2026 output cut

By Cepi Setiadi

Coal industry players have warned of potential downstream impacts from the government’s plan to reduce Indonesia’s national coal production target in 2026 to around 600 million tonnes, cautioning that the policy could affect the broader mining supply chain, particularly high-cost producers and mining service providers.

Executive Director of the Indonesian Coal Mining Association (APBI) Gita Mahyarani said the proposed production cut could have some impact on coal prices in the short to medium term, although the effect is unlikely to be significant or sustainable over the long run.

“Coal prices are influenced by many factors, including global market dynamics, demand conditions, and the energy policies of individual countries,” Gita told Petromindo.com on Friday (January 9).

From an industry perspective, however, she cautioned that prolonged production controls could have broader operational consequences. These include reduced work volumes, lower heavy equipment utilisation, shorter operating hours, and weaker labour absorption, particularly at mines with relatively high production costs.

“Nevertheless, we appreciate the government’s efforts to manage production in order to maintain market balance and price stability,” Gita added.

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A similar view was expressed by Ardhi Ishak, Chairman of the Industrial Relations Division at the Indonesian Mining Professionals Association (PERHAPI), who said the planned reduction in coal output for 2026 would put significant pressure on the national mining industry, especially mining contractors.

Ardhi noted that Indonesia’s coal production in 2025 reached around 790 million tonnes, with domestic consumption estimated at about 254 million tonnes and exports at around 514 million tonnes. By comparison, coal production in 2024 was higher, at approximately 836 million tonnes.

“If coal output in 2026 is limited to around 600 million tonnes, this would represent a decline of roughly 150–180 million tonnes from 2025 levels, or nearly 200 million tonnes compared with 2024,” he said.

Based on PERHAPI’s estimates, every 100 million-tonne reduction in coal production could result in at least 3,500 units of heavy equipment becoming idle and around 10,000 mine workers losing active field work.

“Under such a production-cut scenario, as many as 7,000 units of heavy equipment could potentially stop operating. This is a situation the mining industry will face in the near term and must anticipate immediately,” Ardhi said.

Minister of Energy and Mineral Resources Bahlil Lahadalia said on Thursday that Indonesia plans to cut its coal production target in 2026 to around 600 million tonnes, down from an estimated 790 million tonnes in 2025. Bahlil noted that Indonesia’s dominant position in the global coal market has contributed to oversupply and downward pressure on prices.

Editing by Reiner Simanjuntak