Industry representatives note that this move may represent not just a temporary market intervention but the beginning of a deep restructuring process in the mining sector.
The sharp decline following record production levels in 2024 poses a serious threat particularly to small and medium sized operators. Tighter regulations, more challenging financing conditions and a weak global market outlook are creating a “perfect storm” effect for producers. Sector sources stated that production at some operations could decrease by between 40% and 70%, potentially leading to widespread closures and large scale mergers.
The government’s 600 million ton target aims to balance oversupply in global markets. This policy is implemented under the Rencana Kerja dan Anggaran Biaya system. Companies are required to submit their annual production plans and budgets for government approval. While this framework provides centralized oversight, it also enables close monitoring of production levels.
In the global coal market, oversupply remains a key issue. Against an annual production capacity of approximately 9.1 billion tons, demand for 2026 is expected to remain at around 8.78 billion tons. This surplus of roughly 320 million tons is putting pressure on prices. The price of Indonesian coal has fallen to around USD 103 per ton, reflecting both excess supply and energy transition policies in major consuming countries.
At the same time, challenges in the RKAB approval process are adding further strain to the sector. Around 300 mining companies reportedly failed to submit the required quota applications for 2026. This situation raises the risk of fines or operational suspensions for those firms. According to experts, some companies were unable to apply due to insufficient technical and financial capacity, while others chose to suspend operations rather than accept lower quota allocations.
Analysts expect current regulations to lead to sectoral contraction in the short term, while accelerating a consolidation process in the medium term in which stronger and more scaled companies come to the fore. Significant economic and structural changes are anticipated in Indonesia’s coal sector in the period ahead.
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