The coal industry is bracing for heightened uncertainty and margin pressure following the introduction of a new price reference system that industry players warn will complicate pricing and erode Indonesia's export competitiveness.

Trade Ministry Regulation No. 46/2025, enacted on Dec. 17, outlines new rules for setting export price benchmarks for mining products.

It establishes a new Reference Price (HR) based on the average price across certain domestic and international commodity exchanges, which will be used to determine export duty rates, with a higher HR prompting a higher rate, much like the applicable income tax rate in many countries rises with a person’s salary.

The HR determines the duty bracket, which is then levied on the Export Benchmark Price (HPE) fixed periodically by the trade minister in coordination with other relevant ministries and agencies.

This marks a significant change from previous procedure to determine export duties.

The regulation also formally links the government’s coal benchmark price (HBA) and mineral benchmark price (HMA) to export costs.

“This new layered pricing mechanism directly inserts policy-driven costs into our export contracts,” Gita Mahyarani, acting executive director of the Indonesian Coal Mining Association (APBI), told The Jakarta Post on Monday.

“The [financial] capacity to absorb these [new costs] is rapidly diminishing, particularly for high-cost mines. It will potentially squeeze margins and operational flexibility, although highly efficient mines may remain relatively resilient.”

Gita warned that the mechanism weakened Indonesia's negotiating position, as international buyers could turn to alternative suppliers.

“The room to pass on costs to buyers is very limited, as buyers have supply options from other countries,” she said.

“If the cost gap widens, there is a potential for buyers to diversify their supply to other countries, which could ultimately impact Indonesia's export volumes, especially for price-sensitive market segments.”

She went on to say that the policy also raised investor concerns by adding regulatory complexity during the global energy transition.

“Investors scrutinize certainty. This layering of benchmarks and duties makes the sector appear riskier, potentially affecting valuations and long-term financing.”

Gita anticipates mounting pressure from domestic producers for the government to revise the fixed Domestic Market Obligation (DMO) price to compensate for shrinking export margins.

She emphasized that the pricing scheme “must be updated to reflect today’s cost structures and guarantee long-term supply security.”

Ardhi Ishak, industrial relations and industry association head at the Indonesian Mining Experts Association (Perhapi), said the industry was awaiting clarity on whether it would be a flat fee, vary by coal grade, such as a 1 percent rate for low-calorie coal but 5 percent for high-calorie, or be structured as a progressive levy tied to market prices.

“The impact will, of course, depend heavily on the export duty implementation mechanism. The lowest impact is the last option, adjusted to market price developments,” Ardhi told the Post on Monday, indicating a sliding scale would be less burdensome than fixed rates.

He noted that, based on industry sentiment, a mechanism that follows market price developments was the preferred and fairest approach, as it would automatically adjust the fiscal burden in line with companies' revenue cycles, thereby helping to preserve operational viability amid broader cost pressures.

The new regulation revises the provisions outlined in Trade Ministry Regulation No. 8/2023, which had been amended earlier this year by Regulation No. 10/2025.

The new regulation also stipulates that the existing HPE for dutiable mining products, as established under the previous regulations, will remain in force and will apply until a new one is formally determined specifically for processed and/or refined mining products under the new framework.

Hendra Sinadia, executive director of the Indonesian Mining Association (IMA), expects additional costs to erode corporate profits, especially for producers of low-calorie coal, defined as below 3,800 Gross as Received (GAR), which currently sells for less than US$40 per tonne in the export market.

“Miners [with this operational profile] will surely struggle to survive,” he told the Post on Tuesday.

Hendra linked producers’ bargaining power directly to government policy, noting that current pressures would likely cause a natural decline in supply.

He projected a market correction in 2026, suggesting that reduced oversupply could eventually improve negotiating leverage against international buyers.

Looking ahead, Hendra expected investment to consolidate among large, mature mining companies, while the 2026-2030 period would test producers’ foundations and operational agility.