MEMR: Coal industry to face continued pressure in 2026, calls for positive synergy

By Dominikus

Indonesian Ministry of Energy and Mineral Resources (MEMR) expects the challenges facing Indonesia's coal industry to persist through 2026, citing ongoing pressure on coal prices as a key hurdle to industry growth. The government is calling for positive synergy between the government, producers, buyers, and supporting industries.

“We hope that this meeting can bring positive insights into the mining sector so that the industry can develop. Although in 2026, I still feel that the pressure on coal prices will persist, and it will not be easy for the industry to grow and accelerate. Therefore, it requires discussions and synergy between the government and relevant stakeholders, as is being done at this opportunity,” said Tri Winarno, Director General of Mineral and Coal at the Ministry of Energy and Mineral Resources, during the CT Asia coal conference in Bali on Monday (September 22). This call for synergy underscores the need for collaboration to ensure the coal industry’s resilience amid global economic and market volatility.

Mounting challenges across the industry

The challenges facing the industry are not only related to commodity prices but also to the pressures felt by coal industry stakeholders across various sectors.

Priyadi, Chairman of the Indonesian Coal Mining Association (ICMA), outlined several key challenges currently confronting coal producers:

1. Policy uncertainty and the global economy

The coal industry is facing several policy-related challenges. One key issue is the shortening of the Revised Work Plan and Budget (RKAB) from three years to just one year. Additionally, there are concerns surrounding the Coal Export Duty Plan, which could affect market dynamics. Global price fluctuations, macroeconomic volatility, and the ongoing economic and industrial slowdown further exacerbate these pressures. Moreover, the geopolitical situation remains uncertain, adding another layer of complexity to the industry's operations.

2. Increased production costs

Rising production costs are also a significant concern for coal producers. The implementation of biofuels has contributed to higher production costs. Additionally, the energy mix is changing, with an increased share of renewable energy, which may impact coal demand. The coal phase-out campaign is another factor that could drive up costs, as it influences both production and long-term investments in coal projects.

3. Increasing the added value of coal/coal downstreaming

The push for coal downstreaming is an ongoing challenge. While downstreaming is a regulatory obligation, its development is hampered by several factors. These include the types of downstreaming specified in Government Regulation PP 96/2021, the significant investments required, and issues related to technology readiness and technology transfer. Moreover, the availability of off-takers and the distribution of industrial infrastructure are also crucial factors that need to be addressed to ensure successful downstream development.

4. ESG/sustainability

Sustainability concerns are gaining prominence in the coal industry, especially as the carbon regulatory framework becomes stricter. The tightening of environmental, social, and governance (ESG) regulations is putting additional pressure on coal producers. At the same time, access to coal financing is becoming more challenging as financial institutions and investors increasingly focus on sustainable practices and carbon reduction goals.

PTBA struggles with rising costs and fixed domestic prices

State-owned coal miner PT Bukit Asam Tbk (IDX: PTBA) exemplifies the challenges currently plaguing the industry. Speaking during a panel at the conference, Verisca Hutanto, PTBA’s Commercial Director, said the company is facing significant difficulties in both the domestic and export markets.

“This year, all coal producers have experienced mounting challenges. As a state-owned enterprise, we must strictly comply with government regulations. Since MEMR’s new regulation was issued in March 2025, our export volumes temporarily declined. But thanks to our long-standing relationships with buyers and MEMR’s support, we’ve been able to stabilize operations,” Verisca explained.

Read also: MEMR proposes adaptive export duty scheme for coal and gold

On the domestic front, PTBA’s role as the country’s largest Domestic Market Obligation (DMO) supplier has not shielded it from difficulties. “We are committed to supporting national energy supply, but rising production costs—paired with a fixed DMO price cap that hasn’t changed since 2018—make it increasingly difficult to maintain positive margins. That’s why we’re focusing on efficiency and cost-reduction efforts to preserve profitability,” she added.

In the first half of 2025, PTBA reported a decline in net profit despite an increase in revenue. The company recorded a net profit of Rp 833.05 billion (approximately US$51 million), a 59% decrease from Rp 2.03 trillion (approximately US$125 million) in the same period of 2024.

PTBA produced 21.73 million tons of coal in the first half of 2025, a 16% increase compared to 18.76 million tons during the same period last year. Sales also rose by 8%, reaching 21.62 million tons, up from 20.05 million tons in H1 2024.

Editing by Reiner Simanjuntak