The Indonesian government is currently reviewing the domestic coal pricing formula to ensure greater transparency and support for national mining stakeholders, according to Tri Winarno, Director General of Mineral and Coal at the Ministry of Energy and Mineral Resources (ESDM).

Addressing a hearing with Commission XII of the House of Representatives (DPR) on Tuesday, May 6, 2025, Winarno highlighted inconsistencies in the current pricing mechanism, particularly regarding the Argus price index.

“We still do not know how Argus gets its numbers,” he said. “In contrast, the ICI index is traceable, and EPNBP reflects actual transactions.”

The ministry is also re-evaluating the use of global benchmarks such as the London Metal Exchange (LME) for metallic minerals pricing, with early-stage discussions held along with State mining holding company MindID and State miner Antam. "We are also collecting input from industry associations such as IMA and APBI to develop a more accurate Mineral Reference Price (HMA)," Winarno added.

The review follows a recommendation from the House’s Commission VII and is set to continue over the next month. The government’s objective is to ensure domestic mining operations remain competitive while maximizing state revenues through fair pricing mechanisms and post-mining reclamation compliance.

Winarno acknowledged that price fluctuations in coal and other minerals like nickel and copper are increasingly driven by complex global market dynamics. He noted a significant drop in nickel prices despite Indonesia accounting for 65 percent of global supply, potentially due to decreased demand from China’s stainless steel industry.

To stabilize pricing, the ministry has proposed setting benchmark prices and implementing floor prices through Ministerial Regulation No. 72/2025. Additional strategies include aligning production planning with national demand and export targets, integrating environmental assessments into licensing processes, and evaluating production approvals.

The hearing session also addressed the newly enforced policy requiring 100 percent of export earnings from mineral and coal sectors to be held in domestic special accounts for 12 months.

Winarno clarified that this policy, managed by the Ministry of Finance and the Indonesian Central Bank (BI), does not apply to the oil and gas sector.

The policy's effectiveness and revenue data remain under review, with legislators requesting updated figures for upcoming state budget assumptions.

"We will coordinate with the Finance Ministry to determine how much export revenue has been deposited so far," he said.

The meeting further touched on recent royalty hikes aimed at optimizing state revenue. The revised scheme introduces progressive tariffs, with nickel royalties now ranging up to 19% depending on market prices. For coal, higher royalties apply only when the benchmark price exceeds USD 90 per ton.

“This adjustment ensures that as companies earn more, so does the state,” Winarno concluded.