Indonesia to Nationalize Coal Export Activity
Jakarta is moving to become the single selling point for Indonesia’s thermal coal exports, bringing an end to international buyers negotiating directly with the country’s miners and traders.
The new system, which will go live on 1 June in a transitional process, aims to centralise exports of natural resources, including coal, crude palm oil and nickel ferroalloys. By 1 September, all Indonesian coal exports to foreign buyers will handled by a single state-owned enterprise (SOE).
Authorities say this is intended to improve administrative oversight, prevent under-invoicing and transfer pricing, and strengthen national control over pricing and destination markets.
For seaborne thermal coal trade, the policy risks disrupting global supply flows and triggering price volatility, as international buyers would need to shift from direct agreements with private miners to a state-managed allocation model.
By consolidating export volumes under a single entity, Jakarta would gain leverage to restrict spot offerings, enforce state-set price floors and redirect volumes to domestic power generation, potentially tightening near-term seaborne availability for major Asian utilities.
In an impassioned speech where President Prabowo Subianto reminded his audience about Indonesia’s colonial past under the Dutch and how controlled the archipelagic nation’s natural resources for close to 400 years, the former general said Indonesia must determine its own resource prices rather than accept external market pressure.
“We will determine our selling price and if they do not want to buy, so be it. It’s okay if they do not want to buy it, we’ll leave it in the ground for our future generations,” Prabowo said in a speech on 20 May on the 2027 budget and economic plans.
The Ministry of Energy and Mineral Resources last year introduced a regulation requiring coal sales to be transacted based on the government-set Harga Batubara Acuan (HBA) reference price, which international buyers rejected.
Prabowo is pursuing an assertive economic strategy aimed at reducing what he describes as a disproportionate outflow of national wealth.
Since taking office in October 2024, he has revived Article 33 of Indonesia’s 1945 Constitution, which states that natural resources belong to the public and must serve national interests. The planned export policy is based on this principle.
Internal government estimates suggest Indonesia has over the past 34 years lost up to $900bn through undercounting and pricing manipulation, with actual export values potentially up to 50% higher than reported. By comparison, Indonesia’s annual GDP is around $1.3-1.4trn and total exports are around $250-300bn.
The government plans to strengthen tax and customs enforcement to improve oversight and revenue collection, aiming to capture a larger share of resource profits and reduce leakage.
Energy Equities Suffer Sell-off
Prior to today’s speech, regulatory concerns over a proposed state export aggregator triggered a broad sell-off across Indonesian energy equities, weighing on the Jakarta Composite Index as major coal producers underwent valuation corrections.
Indika Energy has seen the steepest pressure, with its share price falling to IDR2,350, down 22.73% from IDR3,040 on 4 May, and down 23.45% week on week from IDR3,070 on 13 May.
The country’s largest coal producer, Bumi Resources, has also declined to IDR177, down 22.93% from IDR230 on 4 May, and down 17.29% week on week from IDR214 on 13 May.
Major metallurgical coal-focused producer AlamTri Resources Indonesia has moved lower to IDR2,230, down 10.81% from IDR2,500 on 4 May, and down 11.51% week on week from IDR2,520 on 13 May.
The news was also poorly received in overseas trading markets. “We have zero confidence in Indonesian coal policy. It’s a mess,” said a Chinese trader at an international trading house.
The trader added that requiring buyer qualification and due diligence could complicate transactions, with some market participants suggesting it may increase compliance risks in the allocation process.
“This reflects weakening sentiment towards Indonesia’s business environment,” said a coal sector analyst. “With Indonesia’s equity market among the weaker performers this year, it may be a warning sign for policymakers.” The analyst said the policy could potentially benefit Chinese domestic miners.