Indonesia's thermal coal production is projected to be around 720 million tons in 2026, which is above the initial RKAB target of 600 million tons, but a decrease from the 790 million tons produced in 2025. Meanwhile, thermal coal exports are expected to decline to 445 million tons, which is more than 50 million tons less than last year.
Supply Chain Challenges
The issue is not only related to the reduction in coal production, but a complex set of legal, logistical, and quality constraints has created further bottlenecks in coal supply for international buyers. An international trader dealing with Indonesian shipments stated that the upcoming restrictions are more related to factors between the mines and export ships than to the amount of coal available in the mines.
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In the first half of this year, Indonesia's coal exports decreased by 8% compared to last year, reaching 221.7 million tons, while production achieved 367.1 million tons, equivalent to 61.2% of the 600 million tons RKAB target. This separation became more pronounced during the dry season; thermal coal exports in August fell to 36.9 million tons, which is 25% less than last year.
Legal and Logistical Barriers
Decreased water levels in some of the Barito and Mahakam river systems have forced suppliers to reduce shipping loads, change schedules, and in some areas halt movements. This disruption is particularly significant because a large portion of Indonesia's domestic coal production relies on river transport.
In early October, about 95% of the production quota adjustments had been approved, but it is expected that increasing quotas will take time, and some of the additional production will be allocated to domestic needs. In September, three subsidiaries of Bayan Resources informed their customers about force majeure, as the adjustments to their 2026 RKAB quotas had not been approved.
This situation reflects significant changes in the coal supply chain and clearly indicates that the actual amount of coal available for export is influenced by various factors.
Given these conditions, if production increases to 720 million tons but access to exports is limited, the production figure may appear to be more than what actually exists. Ultimately, what matters is not only the amount of coal Indonesia can extract but also the number of tons that pass through various stages of the supply chain and reach the international market.
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