Indonesia to Cut Coal Output to 600 Million Tons in 2026 to Stabilize Prices

JAKARTA, Investortrust.id — Energy and Mineral Resources Minister Bahlil Lahadalia said Indonesia will cut coal production to about 600 million tons in 2026 on Thursday, Jan 8, 2026 in Jakarta to stabilize global prices after oversupply from domestic output pressured the market. The policy is expected to support prices, rebalance supply, and improve long term resource sustainability.

He said coal production reached 790 million tons in 2025, far exceeding Indonesia’s share of global seaborne demand and contributing to price weakness. Indonesia supplied around 514 million tons, or about 43 percent, of globally traded coal estimated at 1.3 billion tons.

To regain control over supply, the government decided to revise the approval mechanism for the Work Plan and Budget, known as RKAB, from a three year cycle to an annual submission. Production quotas for mining permit holders will also be adjusted to better reflect market conditions.

“I have coordinated with the director general of minerals and coal to revise RKAB quotas so production declines, prices improve, and resources can be passed on to future generations,” Bahlil said during a press briefing.

The 2026 RKAB is expected to set coal output at around 600 million tons, although the final figure will depend on market dynamics. Similar supply controls will also be applied to nickel to prevent market distortion and monopolistic practices.

Bahlil said nickel production adjustments are needed to balance industrial demand with ore supply while ensuring fair participation for regional miners. Large smelters will be encouraged to source ore from local producers to support inclusive downstream development.

Coal production cuts are also likely to affect the Domestic Market Obligation, or DMO, which currently stands at around 25 percent of output. With lower overall production, the government may raise the DMO ratio to ensure domestic demand is fully met before exports are allowed.

“Whatever the approved RKAB, the first priority is domestic needs, and only after that exports,” Bahlil said, adding that the exact DMO level for 2026 was still under review.

In 2025, coal output fell 5.5 percent from 836 million tons in 2024 but still exceeded the official target of 739.6 million tons. Of the 790 million tons produced, 254 million tons were allocated for domestic use, 514 million tons were exported, and the rest was held as reserves.

Industry groups urged caution on raising the DMO ratio without revising pricing. The Indonesia Mining Association said the domestic coal price, capped at 70 dollars per metric ton since 2018, no longer reflected rising production costs and higher stripping ratios, which measure the volume of overburden that must be removed to extract each ton of coal and have increased sharply as mines move deeper and reserves become more complex.

This higher stripping ratio has significantly lifted fuel, equipment, and labor costs, reducing margins for producers supplying the domestic market at regulated prices.

“The price has to be reviewed. Since 2018 until now, the DMO coal price has stayed at 70 dollars per metric ton, while production costs have continued to increase,” Hendra Sinadia, Executive Director of the Indonesia Mining Association, said.

Against these concerns, the government said pricing pressures on producers were being taken into account as part of a broader policy recalibration. Bahlil said any additional fiscal measures would be introduced cautiously and only when market conditions were strong enough to absorb them, underscoring that supply controls, pricing, and export levies would be aligned to avoid undermining industry viability.

“Export duties will apply only when coal prices are already profitable, for example at certain ranges above 100 dollars per ton,” he said. The government aims to balance state revenue contributions with business sustainability.

He stressed that while profitable companies must contribute fairly through taxes and levies, the state must also avoid burdening miners during downturns. “If businesses are not making profits, imposing heavy charges would not be fair,” Bahlil said.