Jakarta. Indonesia, the world’s largest coal exporter, plans to slash its coal production to about 600 million tons in 2026, down sharply from this year’s output, as the government moves to boost prices amid weakening global demand.

Energy and Mineral Resources Minister Bahlil Lahadalia said the government will revise its 2026 Work Plan and Budget (RKAB) for mining companies, cutting national coal output from an estimated 790 million tons in 2025 to roughly 600 million tons next year.

“We will reduce production so prices improve, and because these mines must be preserved for future generations,” Bahlil said on Friday. “We should not manage natural resources with the mindset that everything has to be extracted now.”

The planned cut reflects growing concern in Jakarta that excessive output from Indonesia —  the main supplier in the coal market — has contributed to a global glut that continues to weigh on prices. Of the roughly 1.3 billion tons of coal traded worldwide each year, Indonesia supplies about 514 million tons, or more than 40%, according to government data.

Demand from key buyers such as China and India has cooled, driven by higher domestic production in both countries and a gradual shift toward renewable energy. Indonesia’s coal output is already projected to decline to around 790 million tons in 2025, from about 836 million tons in 2024.

During the first nine months of 2025, Indonesia’s coal production fell 15% year-on-year to 509 million tons, while exports slipped 4.7% to around 285 million tons. Shipments to China and India dropped 16% and 12%, respectively.

Global market fundamentals offer little near-term relief. The International Energy Agency expects global coal demand in 2026 to remain broadly flat at around 8.78 billion tons, while supply is projected at roughly 9.1 billion tons, prolonging the imbalance that has pressured prices.

Coal benchmarks have been sliding since early November. Indonesia’s coal reference price fell to $103.3 per ton in the first half of January, down from $109.74 in late October and well below the $114.43 recorded a year earlier.

Bahlil said the production cuts are intended to better align supply with both domestic and international needs, stabilize prices and support sustainable resource management. In 2025, about 32% of Indonesia’s coal production — or roughly 254 million tons — was absorbed by the domestic market under the country’s Domestic Market Obligation (DMO), with the remaining 514 million tons exported.

The Energy Ministry’s directorate general of minerals and coal is now recalculating production quotas for individual miners under the revised RKAB framework, and companies are expected to adjust their business plans accordingly. Similar supply controls could also be applied to other commodities, including nickel, as Indonesia seeks to support downstream processing and long-term sustainability.

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