Jakarta. Indonesia, as the world’s largest coal exporter, has the potential to play a bigger role in determining global coal prices, the Indonesian Energy, Mineral, and Coal Suppliers Association (Aspebindo) said on Friday. The group urged President Prabowo's administration to take strategic steps to strengthen the country’s influence in the global market.

"Indonesia is not just a supplier but a key player in the coal industry. We need to assert our position to ensure fairer pricing that benefits our domestic industry," said Fathul Nugroho, Aspebindo's Deputy Chairperson.

Fathul referred to Energy and Mineral Resources Minister Bahlil Lahadalia’s earlier proposal to establish a national coal price index. While acknowledging that global market trends would still impact domestic prices, he said such an index would provide Indonesia with greater control over this critical commodity and allow for more favorable pricing for local markets.

Beyond pricing, Fathul raised concerns about progressive royalty rates, which range from 3-7 percent for mining business licenses (IUP) and approximately 13 percent for Coal Mining Concession Work Agreements (PKP2B). He argued that the current system burdens small and medium-sized companies, threatening their profitability and sustainability.

"The current royalty rates impose significant challenges, particularly for smaller companies. A review of this policy is essential to avoid further strain on the industry," Fathul said.

As a forward-looking solution, Aspebindo proposed the creation of an Indonesia Green Coal Index that would incorporate carbon taxes, supporting the country’s energy transition.

"This proposal aligns with the government’s plans to implement a carbon tax in 2025, following its delay this year," Fathul added.

According to Fathul, by taking these steps, Indonesia could cement its position as a global leader in the coal industry while balancing domestic needs and the shift toward cleaner energy.

Indonesia's coal export value decreased by 6.68 percent in June 2024 as compared to $2.67 billion in June 2023. However, export volume showed significant year-on-year growth, rising 14.2 percent from 28.6 million tons in the same period last year.

Coal production in 2024 is projected to remain on target, ranging between 780 million and 830 million tons, reflecting an annual growth of 1.5 percent to 7.4 percent, according to industry estimates. Domestic coal consumption is expected to reach 387 million tons in 2024, marking a 12 percent year-on-year increase.