Indonesia's coal production and exports declined for the first time in five years in 2025 on weak demand from key markets China and India.
The world's largest coal exporter produced 790mn t of coal last year, out of which about 514mn t was exported, according to latest government data compiled by Indonesian Coal Mining Association (ICMA). The production volume was down 5.5pc from a year earlier, while exports fell by 7.9pc on the year. But the 2025 output exceeded Indonesia's target of about 740mn t.
This marks the first decline in production and exports since 2020, when Covid-19 pandemic affected demand as well as the coal supply chain. The drop comes as demand from two of the largest coal importing nations, China and India, decreased in 2025 on an increase in domestic coal availability and fall in coal consumption, indicating a broad weakness in the economy and decline of coal-fired generation in the power mix.
Indonesian suppliers recalibrated output in response to weak demand and lower prices. Argus assessed the widely traded GAR 4,200 kcal/kg coal for Supramax vessels at $44.99/t fob Kalimantan on 24 December 2025, down by 71pc from its all-time high of $154.21/t on 21 October 2021. Prices hit a more than four-year lows of $39.40/t in June 2025 and have since hovered in a narrow range that some producers said barely covers costs.
Coal supply may remain under pressure because Jakarta is weighing production cuts and policy changes including the introduction of an export duty on coal, moves that could fuel fresh uncertainty in the global seaborne market.
The country is considering setting coal production target under 700mn t for 2026, although energy minister Bahlil Lahadalia said on 8 January that the final figure would be firmed up after assessing the domestic coal requirements. Indonesian miners need to adhere to regulations to sell at least a quarter of their production locally under the so-called domestic market obligation (DMO). DMO sales reached 254mn t in 2025, while stocks at the end of the year were at 22mn t, according to the government data compiled by ICMA. The government will prioritise coal mining quotas for DMO before it can determine production levels for exports, Lahadalia said.
The Indonesian government also took other measures in 2025 to tighten supply because the ongoing surplus has kept prices under pressure, it said. Some of these steps include withholding export sales proceeds in onshore bank accounts, tweaking domestic coal reference prices — the HBA — rolling out mandatory biofuel blending norms, banning coal hauling in parts of South Sumatra, imposing export tax on coal and reverting to annual RKAB appraisals with increased compliance on mine reclamation.
This comes as the seaborne market appears to be well-supplied, with domestic supply potentially capping the import outlook of China and India, on top of broad weakness in the economy and changing generation patterns.
Economic growth in China — the world's biggest coal importer — is expected to slow to 4.4pc in 2026 from an estimated 4.9pc in 2025, according to World Bank projections. China is also gradually increasing the share of renewable energy in its power generation mix, putting further pressure on overall coal demand. Similarly, coal burn in India has largely remained lacklustre on the back of an extended monsoon spell in 2025 and increase in renewable power generation. The sharp depreciation of the Indian rupee in 2025 has also weighed on imports.
