Jakarta. Indonesia plans to cut production of both nickel and coal next year as the world’s biggest supplier of the two commodities moves to curb oversupply that has dragged prices lower, according to Energy and Mineral Resources Minister Bahlil Lahadalia.

The government will reduce output targets for nickel and coal in its 2026 work plan and budget to better manage supply and stabilize global markets, Bahlil said Friday in Jakarta.

“We are cutting everything, not only nickel, but coal as well,” Bahlil told reporters after a briefing on the energy sector’s readiness for the year-end holiday period. He said the move is a "corrective response to market conditions distorted by excess supply."

Coal benchmarks have been sliding since early November. Indonesia’s coal reference price fell to $98.26 a ton in the first half of December, down from $109.74 a ton in late October and well below the $114.43 a ton recorded in November last year. Prices have weakened across all calorific grades, reflecting softer demand and ample supply.

The production cuts come as demand from key buyers such as China and India has cooled, partly due to higher domestic output in those countries and a gradual shift toward renewable energy. Indonesia’s coal output in 2025 is projected at around 750 million tons, down from about 836 million tons in 2024. For 2026, the government is signaling another year of contraction to below 700 million tons.

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

Global fundamentals suggest limited near-term relief. The International Energy Agency has projected that worldwide coal demand in 2026 will be broadly flat at about 8.78 billion tons, while supply is expected to remain higher at roughly 9.1 billion tons, prolonging the imbalance that has pressured prices.

Bahlil said the government would strictly enforce compliance with the revised production limits, warning that mining companies that fail to adhere to their approved plans risk having their work plan reviewed or revised.

“This is about control,” he said. “Companies that do not follow the rules may see their production plans reassessed.”

A similar strategy is being applied to nickel, a metal critical to stainless steel and electric vehicle batteries, where Indonesia has rapidly expanded output over the past decade. According to local nickel association APNI, Indonesia’s nickel production in 2026 could be cut to about 250 million tons, down sharply from roughly 379 million tons this year.

The decrease comes as the global nickel market faces a deepening surplus. Oversupply is estimated at about 209 million tons this year and could widen to 261 million tons in 2026, with Indonesia accounting for roughly 65% of that excess. 

Add as a preferred source on Google +