Coal industry in Indonesia - statistics & facts
Indonesia is one of the world's largest producers and exporters of coal. Coal mining accounts for around 6.6 percent of Indonesia's national GDP, making it one of the country's most important commodities. Due to its vast resources, Indonesia also has been relying heavily on coal to meet its electricity demands.
Since 2020, coal mines have been obliged to sell 25 percent of the production volume on the domestic market and the state-owned electricity supplier PLN received a maximum price of 70 U.S. dollars per ton of coal purchased. PLN estimated that it would take over 160 million metric tons of coal for power generation in 2023. This number increased compared to their coal allocation in 2022 of around 122.5 million metric tons.
A flourishing export market is essential as around 70 to 75 percent of Indonesia’s coal production is exported abroad. The main export countries include India, China, and Japan. In 2022, about 20 percent of the global coal exports were exported from Indonesia, making it the largest coal exporting country in world. However, the Indonesian energy program could turn the industry into an internal market. For that reason, and to achieve independence from the global market, several large Indonesian mining companies have expanded directly into the energy sector in order to become an integrated energy company that uses its own coal.
Coal as Indonesia’s primary energy source
Indonesia targeted its electricity generation capacity to reach about 85 gigawatts in 2023. For a dynamic, emerging country, this capacity would not be sufficient for long and additional capacities must be created quickly. As coal are available in great quantities, dispatchable, and the corresponding power plants can be built with relatively low costs, coal mining has therefore been a cornerstone of politics and a likely target for government interventions.Since 2020, coal mines have been obliged to sell 25 percent of the production volume on the domestic market and the state-owned electricity supplier PLN received a maximum price of 70 U.S. dollars per ton of coal purchased. PLN estimated that it would take over 160 million metric tons of coal for power generation in 2023. This number increased compared to their coal allocation in 2022 of around 122.5 million metric tons.
Coal production outlook
Unsurprisingly, coal producers expected a thriving market in Indonesia. The coal industry had only been slightly affected by the COVID-19 pandemic, as Indonesia's coal output in 2020 was still even higher in comparison to its pre-pandemic output in 2018. After recovering in 2021, the demand for Indonesian coal had been expected to rise due to the Russia-Ukraine conflict and the ban on Russian fossil fuels. As of 2022, the increase of Indonesia’s coal production reached more than 73 million metric tons.A flourishing export market is essential as around 70 to 75 percent of Indonesia’s coal production is exported abroad. The main export countries include India, China, and Japan. In 2022, about 20 percent of the global coal exports were exported from Indonesia, making it the largest coal exporting country in world. However, the Indonesian energy program could turn the industry into an internal market. For that reason, and to achieve independence from the global market, several large Indonesian mining companies have expanded directly into the energy sector in order to become an integrated energy company that uses its own coal.
