If Coal Production is Cut, Australia and Africa Ready to Replace Indonesia's Supply
The government’s plan to cut national coal production this year is considered risky. This opens opportunities for competing countries to take over Indonesia’s market share.
Chairman of the Indonesian Mining Experts Association (Perhapi) Sudirman Widhy believes the current rise in coal prices should be a momentum for Indonesia to increase production.
According to him, the government needs to reconsider the production restriction policy and open opportunities for increases amid the rise in global market prices. Especially to meet the needs of countries in Southeast Asia.
“Such as the Philippines, Vietnam, and Malaysia, which are already facing difficulties in meeting their national energy needs due to the international oil crisis, and they require additional coal supplies to meet their national energy needs,” Widhy told CNBC Indonesia on Wednesday (25/3/2026).
Widhy acknowledges that Indonesia has a large coal production capacity. This is evident from the national production realisation in 2025, which reached around 790 million tonnes.
He views the production restriction to around 600 million tonnes in the 2026 Work Plan and Budget (RKAB) as potentially providing space for other producing countries to fill the market gap left by Indonesia.
“Such as Australia, South Africa, and Colombia to take advantage by filling the gap left by Indonesia and gaining optimal benefits from the currently high coal prices in the global market,” he said.
Nevertheless, based on the latest developments, the government is likely to cancel the production cut plan and even boost coal production in 2026.
Coordinating Minister for Economic Affairs Airlangga Hartarto revealed that the government is evaluating an increase in coal production volume in the 2026 Work Plan and Budget (RKAB). This step follows President Prabowo Subianto’s directive in the cabinet meeting on Thursday (19/3/2026).
The increase in coal production is expected to help suppress the risk of surges in Fuel Oil (BBM) prices and other energy commodities due to geopolitical turmoil.
“So, the President also asked that the coal production volume be increased. That means there will be an adjustment related to the RKAB,” Airlangga said at the State Palace.
In addition to the production increase, the government is also examining the coal export tax scheme as one effort to optimise state revenues.
With the potential for rising commodity prices, the government hopes to obtain additional income from the windfall profits in the coal sector.
“The hope is that government revenues will also rise with the windfall profits; that will also increase government income,” he said.
It should be noted that, based on Refinitiv data, coal prices in Tuesday’s trading (24/3/2026) were at US$139.75 per tonne.