Indonesian coal association says quota cuts risk mine shutdowns

The Indonesian Coal Miners Association said drastic cuts in production quotas granted by the government may force some operations to shutdown, adding to the woes of the country’s already beleaguered industry.

Output quotas permitted under annual work-plans, known as RKABs, are significantly below last year’s tonnage, the association said in a statement on Saturday. Cuts to individual miners vary from 40% to 70%, likely forcing some to halt if production falls below a viable level, it said in the statement.

Indonesia flagged plans to slash coal output to about 600 million tons a year in a bid to boost prices for the commodity, of which it is the world’s top exporter. Coal prices have fallen for three straight years amid muted demand from top consumer China and a surge in Indonesian production to a record in 2024.

The cuts come as Indonesia’s mining industry faces its toughest conditions in years, with the government looking to levy large fines on operations deemed to have breached their forestry permits. The country is also looking to apply an export levy to coal, which would further undermine profitability.

The association called on the government to review the quota cuts to take into account the viability of operations, saying they could lead to massive layoffs and defaults on loans to miners. Companies may also be unable to meet their pre-agreed supply contracts, it said.

(By Eddie Spence)