Why are Indonesian coal miners cutting production?

Indonesia is cutting coal production by nearly a quarter to boost prices in the global market.

Which coal miners are most affected by Indonesia's production cuts?

Smaller Indonesian coal miners are most affected, as larger companies have reportedly received their full quota requests.

What are the potential consequences of Indonesia's coal production cuts?

The cuts could lead to massive layoffs and defaults on loans for smaller mining operations in Indonesia.

Home / Business and Economy / Indonesia Coal Cuts Hit Small Miners Hardest

Indonesia Coal Cuts Hit Small Miners Hardest

4 Feb

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Summary

Large coal miners received full quota requests, burdening smaller firms.
Indonesia aims to cut coal output by nearly a quarter to boost prices.
Production cuts may cause layoffs and loan defaults for smaller companies.

Indonesia Coal Cuts Hit Small Miners Hardest

Indonesia, the world's largest coal exporter, is implementing substantial production cuts, aiming for a nearly 25% reduction to approximately 600 million tons this year. This strategic move is intended to bolster flagging coal prices.

However, the burden of these cuts is not evenly distributed. Several of Indonesia's largest coal miners, including PT Bumi Resources, PT Adaro Andalan Indonesia, and PT Indika Energy, have reportedly been granted their complete quota requests. These major players hold special mining contracts (IUPKs) and pay higher royalties.

The Indonesian Coal Miners Association has warned that individual miners may face reductions of 40% to 70%, a level that could render some operations economically unviable. The industry is already grappling with increased scrutiny, including potential fines for permit breaches and a proposed export tax.