Coal Mining in Indonesia: Background
1. A background on coal mining in Indonesia.
Coal mining accounts for around 6.6 percent of Indonesia's national GDP. Indonesia is one of the world's largest coal producer and exporter.
In 2023, about 775.18 million metric tons of steam coal were produced in Indonesia. The country also exported over 518 million metric tons of coal, making it one of the largest coal exporters in the world.
In terms of global coal reserves, Indonesia currently ranks 7th with reserves of 31.7 billion tons (2.5% of world coal reserves) according to Indonesia's 2023 Mineral and Coal Reserve Resource Balance, published by the Geological Agency of the Center for Mineral, Coal and Geothermal Resources of the Ministry of Energy and Mineral Resources.
Indonesia's role as a world leader in coal production and exporting is largely driven by an increase in seaborne demand for thermal coal from international markets and rising domestic demand. Indonesia is the world's largest seaborne exporter of coal, accounting for 38.3% of the global seaborne coal market as of August 2024.
Indonesia primarily uses open-pit or surface mining for coal extraction, involving the removal of topsoil and rock (also known as overburden ) to access coal seams using heavy machinery.
Inner Ring: Export (Mt)
Outer Ring: Production (Mt)
China produces 4,780 Mt of coal, almost 5 times as much as Indonesia, but exports only 8.7 Mt, which is less than 2% of its production.
Despite ranking as the world's 3rd largest coal producer, Indonesia has emerged as the global leader in coal exports, creating a fascinating market dynamic that highlights the difference between production capacity and export strategy.
China: Production leader but exports minimally
Produces 4,780 Mt (2024) but exports only 8.7 Mt (0.2%). China's massive domestic demand consumes virtually all production, making it a coal import-dependent economy despite being the world's largest producer.
India: Domestic consumption focus
Produces 1,085 Mt (2024) with virtually no exports. India's rapid industrialization and energy needs mean all coal production is consumed domestically, often requiring additional imports.
Indonesia: Leads globally in coal export
Produces 836 Mt (2024) and exports 533 Mt (63.7%). Indonesia's strategic position, lower domestic demand, and export-oriented mining policy make it the world's largest coal exporter despite ranking 3rd in production.
Market Implications
This creates a unique market opportunity where Indonesia controls global coal supply chains while China and India drive demand. Indonesia's export capacity has grown consistently from 395.6 Mt (2020) to 532.9 Mt (2024), solidifying its position as the world's coal export hub and making it indispensable to global energy security.
💡 Key Insight: The biggest producers aren't always the biggest exporters. Domestic demand patterns determine export capacity more than production volume.