Indonesia scrapes off the minimum selling price benchmark for coal for gaining a competitive edge amid global oversupply

Indonesia has dismantled its system of mandatory benchmark pricing for coal, a decisive move that grants mining companies the freedom to negotiate sales based on market conditions. This policy shift marks a significant victory for an industry that had long petitioned the government for greater commercial flexibility.

The reform arrives as the global coal market contends with a severe oversupply, which has driven prices down by more than 70% since the end of 2022. By removing the pricing floor, Indonesia aims to bolster the competitiveness of its exports. The country is the world's third-largest producer of coal, and the sector has demonstrated surprising resilience, with production more than doubling since 2020 to reach 833 million tonnes in 2024.

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However, the government has maintained a key fiscal safeguard. While miners can now sell below the benchmark, their tax obligations and production levies will continue to be calculated using the older, higher government price. This ensures state revenue remains protected even as sales prices become more volatile. This move is aimed at helping Indonesia sustain its vital coal industry for the foreseeable future, even as other nations signal a transition away from fossil fuels.