Indonesia to Cut Mining Output Quotas to Support Commodity Prices, Minister Says

Indonesia’s government has announced plans to reduce mining output quotas in a bid to stabilize commodity prices, including coal and nickel, Energy and Mineral Resources Minister Bahlil Lahadalia said in an interview with local news channel TvOne on Tuesday. The move aims to ensure that mineral prices remain “rational,” which would allow companies to profit while increasing government revenues through royalties and taxes.

“We are slashing production under the RKAB,” Bahlil explained, referring to the annual production plan submitted by mining companies for government approval. “When prices are good, businesses can achieve higher profits, and the state benefits from increased royalties and taxes. This is what we are focusing on now.”

The minister highlighted the ongoing slump in coal prices but did not provide specific figures for how much coal or nickel quotas would be cut. The announcement, however, has already affected markets, with nickel prices in Shanghai climbing more than 3% on reports of Indonesia’s plans to curb 2026 output.

Indonesia is the world’s top exporter of thermal coal and nickel products, giving its production decisions significant influence on global commodity markets. The government, through reductions in quantity of mining output, is trying to create a balance between supply and demand through regulation of market prices, while at the same time ensuring that sustainable mining practices are being followed.

According to Bahlil, the goal of limiting production is also to mitigate some of the environmental conditions created through mining operations. In addition, rather than just focusing on growth and economic success at the expense of environmental sustainability, the government's recent initiatives are showing that responsible use of natural resources and commitment to environmental sustainability are increasingly becoming an important part of Indonesia's overall growth strategy.

In addition, several analysts have indicated that reduction in mining quotas would enable some of the struggling coal and nickel miners in Indonesia to see increased revenues, since by controlling the amount of available product, this will result in increased revenue for both the mining companies and the Indonesian national government.

By placing quotas on mining companies through their RKAB-approved plans, mining companies will be able to align their production output with the government's stated production goals. As Indonesia continues to lower the amount of allowable mining production, many industry participants will be analyzing coal and nickel prices, and regulatory developments that will affect each industry's global energy and overall supply chain.