Indonesia Forecasts 12% Coal Output Decline to 720 Million Tonnes in 2026

Annual production forecast falls to 720 million tonnes

Indonesia’s Ministry of Energy and Mineral Resources expects national coal production to reach about 720 million tonnes by the end of 2026, according to Katadata. The forecast is based on average monthly output of approximately 60 million tonnes and represents a reported decline of 12% from the previous year.

Director General of Minerals and Coal Tri Winarno said production through July stood at 423 million tonnes. By comparison, Indonesia produced 817 million tonnes in 2025, equivalent to an average of about 68 million tonnes per month. The ministry therefore estimates that monthly production has fallen by approximately 8 million tonnes, while the reported annual reduction is about 100 million tonnes.

Exports remain the largest destination

Of the 423 million tonnes produced through July, 270 million tonnes, or 63.82%, were exported. Domestic users received 113.8 million tonnes, representing 26.86%, while 39.51 million tonnes, or 9.32%, went into stocks. India and China remain the principal foreign markets for Indonesian coal.

If the current allocation pattern continues, lower production will primarily reduce the volume available to the export market. Indonesia is a major supplier of thermal coal to Asia, and a sustained monthly reduction would leave buyers in India and China competing for a smaller pool of Indonesian material unless domestic deliveries or stock accumulation also decline.

The effect on traded volumes will depend on how producers distribute the remaining output and whether the government relaxes approved quotas later in the year. Domestic supply is one of the factors the ministry must consider when reviewing quota changes, alongside international commodity prices and the balance between demand and supply.

Quota controls support revenue and prices

The production decline follows the government’s decision to reduce coal and nickel quotas under the annual work plan and budget approval system known as RKAB. Mining companies require an approved RKAB before they can produce. Tri said 50 work plans submitted by mineral and coal companies were still pending as 2026 approached its final quarter. Outstanding receivables and incomplete reclamation obligations can prevent companies from obtaining approval.

The government says the quota reductions are intended to support commodity prices. Energy and Mineral Resources Minister Bahlil Lahadalia has said companies paying higher royalties will receive priority when the ministry considers RKAB flexibility. He cited a royalty rate of 19% when explaining that policy.

Despite lower output, coal-related non-tax state revenue increased. Katadata reported that receipts rose to Rp66 trillion in January-August 2026 from Rp59 trillion in the same period of 2025, an increase of Rp7 trillion. The figures indicate that lower production has not translated into lower government collections, potentially reflecting the effect of royalty payments, prices or the mix of approved producers, although the ministry did not provide a detailed breakdown.

Revisions could alter the final balance

Quota adjustments remain possible under Energy and Mineral Resources Ministerial Regulation No. 17 of 2025. Companies may request changes after submitting periodic reports through the second quarter, with applications due no later than 31 July of the relevant year. Bahlil said revisions would be measured and would account for domestic requirements and global prices, but he declined to disclose the potential volume because publication could cause price volatility.

For producers, the pending approvals and preference for high-royalty operators make regulatory compliance increasingly important to output planning. For Asian utilities and traders, the central issue is whether Indonesia’s projected reduction persists through the remainder of 2026 or is partly reversed through RKAB revisions. The final decision will influence export availability, state revenue and the regional thermal-coal supply balance.