The Government has recently made changes to how Indonesia’s coal producers must price their coal for the purposes of both domestic sales and export.
Superficially, the coal pricing changes might seem to be largely administrative and non-substantive in nature. However, once the implications of these changes are properly understood, it is apparent that that they are, in fact, significant not only in terms of their immediate financial impact on Indonesian coal producers but also in terms of how they may affect foreign coal buyers’ willingness to continue their existing long term coal supply contracts with Indonesian producers.
The coal pricing changes come at a particularly unfortunate juncture for Indonesia’s coal producers given the rapid weakening of international coal prices in 2025. At the same time, various other regulatory and related changes (actual and proposed) are making an already difficult financial situation for coal producers that much worse. It would be understandable if local coal producers feel that they are now “facing a perfect storm”.
In this article, the writer will review the recent coal pricing changes and the implications of the same before discussing various other developments that, together, are only likely to further reduce the capacity of Indonesia’s coal producers to readily absorb the financial impact of weakening international coal prices.
Author: Bill Sullivan
Email: bsullivan@cteolaw.com