Coal logistics in Indonesia's South Sumatra province have been thrown into challenges after authorities suspended coal barging on the Lalan River and enforced a long-planned ban on coal trucks using public roads starting from January 1, 2026, threatening exports from some mines in one of the country's key producing regions.

South Sumatra ranks second in coal reserves and third in production in Indonesia, the world's largest thermal coal exporter. Coal exports in the province represent around 17-20% of the country's total.

Coal barging on the Lalan River was halted from January 1 after local authorities ordered vessels not to pass under the Karang Agung bridge, also known as the P.6 Lalan bridge, following unresolved safety and funding issues linked to repairs. It remains unclear when coal barges will be allowed to navigate the river.

The bridge, located in Musi Banyuasin (Muba) regency, was damaged in August 2024 following an allision by a coal barge. But barging had continued despite the incident.

Apriyadi Mahmud, Assistant I for Government and Public Welfare at the South Sumatra provincial administration, said two weeks ago that the government would wait until end-2025 deadline for funds to be deposited before enforcing the closure.

At the same time, the Muba regency began enforcing a province-wide prohibition on coal transport vehicles using public roads, in line with a South Sumatra government instruction issued last year. From January 1, coal trucks are required to use dedicated mining roads or alternative transport such as rail or river routes, officials said.

The twin measures are expected to constrain coal movements from some mining areas in the province, where the number of dedicated coal hauling roads remains inadequate. Several mining companies that had relied on public routes are still in the process of building private roads.

Sources disclosed that a number of miners, particularly small-sized ones, have already cut output due to the logistics disruptions, though it is hard to quantify the exact impact. Supply from the affected areas is likely to be heavily restricted, with very few January-loading cargoes reportedly being offered.

Mines directly affected by the Lalan River closure include Gorby, Bayan Koalindo Lestari, Triaryani, Barasentosa Lestari, BSPC and PT APE, according to industry participants. Separately, more than 10 mines in Lahat regency are expected to be significantly impacted by the public road haulage ban. Some producers, including state miner PT Bukit Asam Tbk (PTBA), are largely insulated due to access to railways or dedicated infrastructure.

Coal transportation in South Sumatra is mostly carried by trucks and trains. PT Titan Infra Energy, a major logistics company in the province, has already established 113 kilometers of hauling lines across three regencies: Lahat, Muara Enim, and Pali, yet it remains insufficient to cover coal transportation needs in the province.

The main coal mining areas in the province are located in Muara Enim, Lahat, Muba, Musi Rawas Utara, and Ogan Komering.

The logistics squeeze comes together with regulatory headwinds facing Indonesian coal producers. Delays in approvals for annual work plans and budgets, known as RKABs, have restrained production at some mines. The Energy and Mineral Resources Ministry (ESDM) has shortened the validity of RKABs from three years to one year starting from 2026, and the government has ordered miners to reapply for quotas previously issued for 2026 and 2027. However, some miners are still waiting for quotas for 2026.

To mitigate the impact, the government lately allowed miners to produce up to 25% of their previously-approved 2026 quota under the three-year mechanism until the end of March 2026.

Uncertainty also persists over Jakarta's plan to introduce a coal export tax, which was initially slated to take effect from January 1, 2026, but has been delayed, adding to producers' caution in offering cargoes, traders said.

Indonesia is considering setting a coal production target below 700 million tonnes for 2026, down from about 735 million tonnes of target set for 2025, mainly due to expectations of weaker demand from major buyers China and India.

Some importer sources told Sxcoal that reduced availability has pushed up transaction prices for the most liquidate 3,800 Kcal/kg NAR coal to $48-49/t FOB, while offers were heard at $49.5/t or so.