Indonesia Enforces Coal Price Benchmark Amidst Chinese Opposition

Beginning March 1, Indonesia will implement a mandatory government-set benchmark coal price (HBA) for all coal exports to enhance state control over pricing and increase revenue from royalties. Energy Minister Bahlil Lahadalia stated that the new regulation aims to shift from reliance on foreign pricing mechanisms to a more authoritative domestic standard, thereby securing better prices for Indonesian coal in the global market. The HBA will be updated bi-monthly to reflect market conditions and will serve as the basis for royalty calculations, with non-compliance resulting in fines or license revocations. This policy has faced criticism from Chinese firms, who are reluctant to pay higher costs amidst lower prices from other suppliers. Additionally, the HBA will stabilize pricing structures amid fluctuating market conditions, aligning with Indonesia’s economic goals. The regulation reflects Indonesia's ambition to assert its influence in the global coal market, especially given its status as one of the world's largest coal producers.