Indonesia’s Coal Demand in 2026 Forecast to Remain Stable, DMO Likely Unchanged
24 Nov 2025, 04:18 AM
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Industry experts predict that the domestic market obligation (DMO) volume for coal will not be changed in 2026, even though there is a plan to widen the mandatory domestic supply portion in line with the discourse of cutting Indonesia’s coal production next year.Rizal Kasli, Chair of the Indonesian Engineers Association’s Mining Engineering Board, believes that expanding the Domestic Market Obligation (DMO) quota is necessary if the government is serious about cutting coal production.The reason is that if the DMO portion remains 25% while production is reduced, the absolute DMO volume will decline and thus will not meet domestic needs.“For example, so far 25% has been set as the DMO from each company’s total coal production. If production is 850 million tons, then the DMO is 212.5 million tons. However, if the government’s planned production drops, say, to 750 million tons while DMO needs are 230 million tons, then the DMO that must be set is 30% of total production,” Rizal said when contacted on Monday (Nov 24, 2025).It’s not the percentage that should serve as the benchmark, but the actual needs and the production level the government aims for,” he stressed.He believes the ideal DMO portion must be based on domestic needs—whether for the electricity sector, cement, fertilizer, or other industries.“So the government can calculate precisely how much DMO needs to be set,” he said.Stable DemandSeparately, the Chairman of the Indonesian Mining Professionals Association (PERHAPI), Sudirman Widhy Hartono, projects that domestic coal demand will still be around 200 million tons next year, judging from the consumption trend since 2024.He explained that domestic coal consumption in 2024 reached 233 million tons, while this year it is estimated at 220 million tons.Therefore, with no plans to increase power plant capacity, Indonesia’s coal consumption in 2026 is predicted to move within that range.“In our view, national domestic coal demand next year will not differ much from this year, given that PLTU (coal-fired power plant) capacity in Indonesia is not increasing,” said Sudirman.“Domestic coal consumption in non-power sectors such as cement, fertilizer, and smelters also does not show any significant increase.”Sudirman also views the discourse on raising the DMO portion as being promoted because the government wants to cut coal production next year.“Whatever the new DMO percentage figure is, we hope it is done proportionally to ensure fairness for all coal mining companies, and that it can be absorbed by the domestic market,” Sudirman emphasized.The Ministry of Energy and Mineral Resources (ESDM) is planning to cut next year’s coal production target, while opening the option of raising the mandatory domestic supply portion.The plan to cut production and the option to increase the DMO are currently under evaluation in line with the deadline for mining companies to submit their 2026 Work Plan and Budget (RKAB).ESDM’s Director General of Minerals and Coal, Tri Winarno, opened the possibility that Indonesia’s coal production target next year will be lowered to below 700 million tons, or lower than this year’s target of 735 million tons.Tri explained that if coal production is cut and the DMO percentage remains the same, the volume of coal that must be supplied to the domestic market will actually decrease. Thus, the idea of raising the DMO portion is being pursued to balance this.“Logically, if demand is roughly the same, the [DMO] percentage is raised, which means production is lowered. As to how far [to raise the DMO portion], that hasn’t been decided,” Tri said at the parliamentary complex on Thursday (Nov 13, 2025).The ESDM has set this year’s coal production target at 735 million tons. From January to September 2025, ESDM recorded Indonesia’s coal production at 585 million tons, contracting 7.47% year-on-year.Meanwhile, Statistics Indonesia (BPS) reported that coal export performance from January to September 2025 fell 20.85% to USD 17.94 billion, or around IDR 298.79 trillion (assuming IDR 16,655 per US dollar).In volume terms, coal exports declined 4.74% to 285.23 million tons through September 2025, lower than the 299.41 million tons in the same period last year.As a note, the latest rules on coal DMO are stipulated in Government Regulation (PP) No. 39 of 2025, a derivative regulation of Law No. 2 of 2025 on Minerals and Coal.In that regulation, the government affirms the obligation to supply coal to state-owned enterprises that manage the electricity, energy, fertilizer sectors, and other national strategic industries.
