Prabowo tells coal miners to meet downstream processing commitments
Wednesday, August 5 2026 - 07:16 AM WIB
President Prabowo Subianto has instructed coal mining companies that received extensions of their mining licences to comply with mandatory downstream processing commitments, Energy and Mineral Resources Minister Bahlil Lahadalia said on Tuesday.
The directive applies to companies whose Coal Mining Contracts of Work (PKP2B) have been converted into Special Mining Business Licences (IUPKs), under which miners are required to invest in value-added processing projects.
"I also reported to the President on the downstream processing programs of several national companies whose PKP2B contracts have been extended into IUPKs. One of their obligations is to carry out downstream processing," Bahlil told reporters after attending a cabinet meeting chaired by Prabowo at the presidential palace.
"The President's directive is that these obligations must be implemented strictly in accordance with the regulations," he added.
Bahlil did not identify any companies that were failing to meet their commitments but said the government would take action against those that did not comply.
"If any company fails to comply with the regulations, appropriate and measurable actions will be taken," he said.
Indonesia has required holders of first-generation PKP2B contracts seeking licence extensions to commit to downstream processing investments as part of the country's broader strategy to increase domestic value-added production and reduce exports of raw commodities.
Among the major coal producers that have transitioned from PKP2B contracts to IUPKs are Adaro Indonesia, Arutmin Indonesia, Berau Coal, Indominco Mandiri, Kaltim Prima Coal, Kideco Jaya Agung, Multi Harapan Utama, Kendilo Coal Indonesia and Tanito Harum.
Arutmin Indonesia and Kaltim Prima Coal, through their joint venture PT Bumi Etam Chemical, recently started the front-end engineering design (FEED) and engineering, procurement, construction and commissioning (EPCC) phases of a $2.3 billion coal-to-methanol project.
The project is scheduled to begin commercial operations in 2030, with planned methanol production of 2 million metric tons per year in its initial phase, rising to as much as 3.6 million tons annually in a later expansion.
Editing by Reiner Simanjuntak