The Indonesian government has issued a decree removing the obligation for miners to use government benchmark prices as the minimum price for minerals and coal sales. Previously, Jakarta mandated the use of a coal benchmark price for transactions starting from March, aiming to exercise greater control over the valuation of both domestic and export sales of this fuel commodity. This benchmark was also used to calculate royalties.
However, the new decree allows miners to sell minerals and coal at prices below the government-set benchmarks. Despite this flexibility, production levies and tax obligations on these transactions will continue to be calculated based on the benchmark prices. Industry feedback indicated a preference for using the Indonesian Coal Index to price shipments, citing its transparency, more frequent updates, and generally lower price levels compared to the government benchmark.
Indonesia’s coal production has more than doubled since 2020, growing at an average rate of 7% per year, reaching 833 Mt in 2024. Indonesia is the world’s third-largest producer of coal and lignite. Exports have increased by 10% annually since 2021, reaching 566 Mt in 2024.