A study by Publish What You Pay (PWYP) Indonesia predicts that coal reserves will be depleted within the next 30 to 50 years. “This indicates that coal reserves won’t last that long,” said Ditto Mohammad Ikhsan, a researcher at PWYP Indonesia.
So far, the coal industry has been the main pillar of the national economy. Its contribution to gross domestic product (GDP) exceeds 5%.
The Ministry of Energy and Mineral Resources (KESDM) notes the abundance of Indonesia’s coal resources. The total reserves amount to 143.73 billion tons, with verified reserves of 25.83 billion tons.
The power generation sector still dominates domestic coal consumption, accounting for 57% or 133 million tons. Smelters account for 30% or 70 million tons by 2024.
The current annual production rate is around 700–800 million tons. This figure exceeds the production limit mandated by Presidential Regulation No. 22 of 2017 on the National Energy Roadmap (RUEN), which sets the limit at 400 million tons.
Ditto noted that demand for Indonesian coal is declining. Major importers like China are beginning to shift to other suppliers such as Mongolia and Russia.
Additionally, China has begun aggressively expanding its domestic renewable energy production and gradually reducing its coal use.
According to him, the 2022 surge in profits, which contributed 6.6% to GDP, was not due to increased demand for Indonesian coal. Rather, it was a domino effect of the Russia-Ukraine war.
The global crisis has sent coal prices soaring. However, he cautioned that reliance on external fluctuations makes the coal industry vulnerable to shocks.
On the labor front, signs of a decline are also evident. The automation of heavy machinery, efficiency improvements, and cost-cutting measures have led many companies to reduce their workforce.
“After 2025, the trend in labor demand may stagnate or even decline.”
A coal mine in Bathin XXIV Sub District, Batanghari, which was previously the territory of the Anak Dalam tribe. Photo: Teguh Suprayitno/Mongabay Indonesia
Driving deforestation
Another reason mining companies should consider halting their operations is the detrimental environmental impact of this extractive industry.
Haris Retno Susmiyati, a mining law expert from Mulawarman University, revealed that mining expansion has reached 10,466,060 hectares, or 44% of the land area of the Indonesian archipelago.
As a result, Indonesia has become one of the four countries in the world with the highest rate of tropical forest loss or deforestation due to large-scale mining. This situation is occurring on major islands, along the coast, and on smaller islands.
“The critical question is: to what extent will mining continue to be carried out and tolerated?”
The Mining Advocacy Network (Jatam) notes that 44% of Indonesia’s land area has already been allocated for mining. Land grabs spread across 35 small islands total 351,933 hectares.
Mining operations have left 3,092 gaping holes. Jatam reports that approximately 143 lives have been lost as a result.
Retno said that, ironically, certain regulations have actually exacerbated the current situation. For example, Law No. 2 of 2025 on Mineral and Coal Mining, which expands access to mining permits.
This regulation, she said, grants mining permits to cooperatives, MSMEs, and community organizations, including religious organizations.
She also highlighted the definition of the mining jurisdiction. This is because the area covers all customary territories, maritime zones, including underground spaces and the continental shelf.
Another problematic provision appears in Presidential Instruction (Inpres) No. 5 of 2019, which creates loopholes for mining in forest areas. Companies are permitted to use forest areas for exploration activities. This allows for mining exploration even though such areas are supposed to be protected or exempt from industrial activities.
Retno recommends that the moratorium on mining permits be more ambitious. A permanent mining moratorium, including for coastal areas and small islands, is also urgent. This is in accordance with Law No. 1 of 2014 on the Management of Coastal Areas and Small Islands.
“A moratorium on new mining permits must be followed by an audit and evaluation of existing permits!”
A nationwide moratorium, she continued, is necessary for safety and sustainability. This policy must include provisions for sanctions and legal implications to ensure its enforceability and deterrent effect.
“In addition, the regulations set forth in the Presidential Instruction need to be elevated to the level of a Government Regulation or a Law to give them greater legal force.”
Coal mining destroys the environment and harms the social, economic, and public health of communities. Photo: Jatam Kaltim
Difficult but possible
PWYP Indonesia believes that immediately halting coal production may be difficult. However, we can start by reducing it. Transitioning to green businesses will not result in losses in the long run.
Anglo American, which is gradually reducing coal production and shifting to solar power plants, initially experienced a 26% drop in revenue. However, its performance improved afterward.
In its research, PWYP Indonesia revealed that many coal companies have already begun to shift and diversify their businesses. Unfortunately, many are still exploiting nickel.
They suggest several options for more sustainable energy development, such as hydroelectric power plants (PLTA), geothermal power plants (PLTP), and solar power plants (PLTS). However, there must be policy support for these initiatives.
Gita Mahyarani, Executive Director of the Indonesian Coal Mining Association (APBI), stated that the energy transition cannot be achieved in just one or two years. It requires a significant amount of time.
“So, collaboration is needed for the short term,” she said.
A large coal on the Batanghari River, Jambi. Photo: Teguh Suprayitno/Mongabay Indonesia
On the other hand, Primi Suharmadhi Putri, an academic from Gadjah Mada University, urged a reduction in emissions. She reminded the government that dependence on coal will be the main obstacle
On the other hand, Primi Suharmadhi Putri, an academic from Gadjah Mada University, is calling for a reduction in emissions. She warned the government that reliance on coal will be a major obstacle to achieving the targets set out in the Second Nationally Determined Contribution (SNDC).
According to her, the energy transition is inevitable, but the shift must not negatively impact vulnerable groups, such as mine workers, local communities, and regions that produce mining products.
Many women are affected by mining activities. They lose access to clean water and their livelihoods.
The government must strengthen social protection and provide economic alternatives for mine workers and affected communities.
Furthermore, she said, the government must ensure affordable and equitable access to clean energy for all citizens so that no community group is left behind in the national transition strategy. The energy transition must be guided by the principle of justice.
“Implementing these principles is crucial so that energy transition efforts not only meet climate targets but also prioritize social justice.”
Communities living near coal-fired power plants not only lose their living space but are also affected by various health issues.
Source: Mongabay