Indonesia coal miners warn of layoffs, economic risks over proposed output cuts
The trims aim to push up the plunging thermal coal prices amid fears of oversupply by the country
[SINGAPORE] Indonesia’s Coal Mining Association (ICMA) has objected to steep production cuts for 2026 proposed by the government, saying that the move could trigger mass layoffs and harm the mining industry.
The ICMA represents companies producing two-thirds of Indonesia’s coal.
Most members of the association received output quotas that were 40 to 70 per cent lower than the 2025 levels, it said in a Jan 31 letter to Bahlil Lahadalia, the energy and mineral resources minister.
“We submit our objection and request for reconsideration of the 2026 coal production cuts,” the association added.
The proposed output cut is an attempt to shore up the plunging thermal coal prices amid fears of oversupply by the world’s largest exporter of the fossil fuel, the revenues of which have been hit by falling demand from its top importers, China and India.
With the production scale significantly reduced, companies face economic unfeasibility as the fixed costs and obligations cannot be adequately covered, it added.
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The energy ministry and its directorate-general for coal did not immediately respond to requests for comment.
The shares of Indonesia’s top coal miners by output plunged in 2025, underperforming the broader market’s growth of nearly 22 per cent. Major Indonesian energy group Adaro fell 18 per cent last year, while Golden Energy Mines lost 24 per cent, and Bukit Asam fell 16 per cent.
Citi analyst Ryan Davis said that the cuts exceed the rate of decline anticipated, after the government earlier indicated an annual output of 600 million tonnes. Indonesia produced 790 million tonnes of coal in 2025, down 5.5 per cent annually.
“The current adjustments are abrupt and highly uneven across producers, incrementally increasing (the) execution risk,” he said on Monday (Feb 2).
The association said that the impact would ripple beyond mining firms, affecting contractors, transport and shipping companies, and raise the risk of loan defaults in coal-producing regions. REUTERS
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