Indonesia's government informs of production quota cuts for most miners in 2026: sources

The Indonesian government has started the process of informing individual miners about their production quotas for 2026, substantial cuts from their proposed quotas expected, according to market sources.

As per the pre-approval notices being sent out to individual miners that had sought approval for this year's production quota under the Rencana Kerja dan Anggaran Biaya (RKAB), the government has approved lowered production quotas for miners with reductions on their proposed quota ranging from 9% to as high as 80%, according to a list seen by Platts Jan. 30.

Only one miner has been provided with a higher quota than they had been seeking for 2026.

"The government has already said this year total production will be 600 million mt. Definitely, it has to cut from somewhere. It was expected," an Indonesia-based miner said.

The miners have been asked to amend their production quotas in accordance with the pre-approved notice and resubmit their Work and Budget Plans so the government can provide final approval.

The reduction in pre-approved quotes aligns with comments by Energy and Mineral Resources Minister Bahlil Lahadalia, who said Jan. 8 that the government planned to reduce coal production in 2026 to roughly 600 million mt, down from 790 million mt in 2025.

The reduction in production quota comes at a time when miners have been grappling with low prices as a result of weaker imports from the likes of India and China in 2025, which resulted in lower revenues for the government that relies heavily on revenue through the mining industry and exports, market participants said.

"My government is expecting a price increase with this production cut for their revenue, but I disagree with the premise. The price will increase in the short term for sure due to the sentiment. Although I don't think it would last long," another Indonesia-based miner said.

Platts-assessed FOB Kalimantan 4,200 kcal/kg GAR coal, the most liquid grade of thermal coal, averaged $45.30/mt in 2025, compared with an average of $53.80/mt in the previous year. A similar drop was also seen in the FOB Kalimantan 5,000 kcal/kg GAR coal price as the average for 2025 dropped to $61.30/mt compared with an average of $73.50/mt a year ago, Platts data showed.

Market participants expected news of production cuts earlier in the month to lift prices sharply, but so far prices have seen only limited gains as the anticipated demand levels, particularly from China, have not materialized.

The average price of the 4,200 kcal/kg GAR grade was at $46.55/mt FOB in January, up slightly from $46.25/mt FOB in December 2025, Platts data showed, with much of the strength driven by Chinese restocking ahead of the Lunar New Year rather than tightening supply. Platts assessed the grade at $47.5/mt Jan. 30, unchanged from a day ago.

Some market participants believe that the reduction in production quotas is likely to push more coal into the domestic market as Indonesian miners are obligated to sell 30% of their total production each year to domestic buyers under the Domestic Market Obligation.

"If volumes for miners are cut, DMO percentage in all likelihood will increase because the volumes required by PLN are increasing, so to cater to that demand, miners can be asked to supply more to PLN at capped prices," an Indonesia-based trader said.

While the miners who submitted their 2026 quotas have received a sharp reduction in their pre-approved quotas, nearly 300 miners have yet to submit their quotas under RKAB due to failure to comply with Forest Area Borrow-to-Use Permits (IPPKH), as per local media reports.

At a time when Indonesia is already facing supply constraints due to disruptions being faced by the coal transportation along the Mahakam River in Indonesia's East Kalimantan province, following the temporary closure of ship traffic beneath the Mahakam Ulu (Mahulu) Bridge, this has added to increasing logistical pressures on Indonesia's coal supply chain.

Platts is a part of S&P Global Energy.