Indonesia coal sector faces structural pressure as exports weaken

By Adianto P. Simamora

Indonesia’s coal industry is entering a structurally more challenging phase as export demand softens and tighter production policies take effect, industry executives and analysts said at a recent forum.

Market analyst Yudhi Putro said weaker overseas demand is colliding with domestic output controls, creating pressure across the coal value chain.

He estimated Indonesia’s remaining coal reserves at around 35 billion tonnes. At current annual output of roughly 800 million tonnes, reserves would last less than 40 years — a timeline that overlaps with the country’s 2060 net-zero emissions target.

“If we produce around 800 million tonnes per year, those reserves will not even last 40 years, while our net-zero target is around 2060,” said Yudhi, Director at PT Kaldera Energi Nusantara, during a panel discussion at the IFTAR CoalMetalAsia forum.

Indonesia produced about 817 million tonnes of coal in 2025, with exports reaching roughly 515 million tonnes and domestic consumption at about 255 million tonnes.

For 2026, Yudhi projected exports of between 460 million and 480 million tonnes, with total demand — domestic and export combined — estimated at 720 million to 780 million tonnes.

Demand from China is under pressure as higher domestic output and energy transition policies reduce import needs, while India’s rising local production is increasingly offsetting imports. Southeast Asian markets are expanding, but not at a scale sufficient to offset slower buying from the two largest consumers.

Read also: Barge overcapacity hits coal logistics as volumes adjust

Echoing that view, Ramli Ahmad, President Director of PT Ombilin Energi, said the current environment reflects structural pressure rather than a temporary downturn.

“The world today is much more complex than 20 years ago. Indonesia is the largest exporter of coal in the world, but we are not the biggest producer — China and India are still larger,” he said at the same forum.

Ramli said purchasing decisions are increasingly driven by price, with buyers prioritising lower-cost supply. Once customers shift to alternative sources, regaining market share becomes more difficult.

He added that Indonesia’s production control policy has drawn close attention from overseas buyers, particularly in India. While market participants understand the rationale behind output management, they remain cautious about its long-term implications.

“We have to play the long-term game,” Ramli said, stressing the need for operational resilience and clearer policy implementation to provide planning certainty in a more competitive global market.

Yudhi warned that output cuts would affect not only miners but also contractors, transport and logistics firms, barge operators, banks and coal-dependent regional economies.

“When production is cut, all of them are exposed,” he said, citing risks ranging from idle heavy equipment and contract revisions to financial strain and job losses.

The Ministry of Energy and Mineral Resources has announced plans to cap coal production at around 600 million tonnes this year, down sharply from 790 million tonnes produced in 2025.

While some market participants hope tighter supply could lift prices, Yudhi cautioned that higher prices may prompt China and India to increase domestic output instead.

“If we cut production, will prices go up? Maybe yes, maybe no,” he said.

Editing by Reiner Simanjuntak