[SMM Coal Flash] Indonesia Tightens Rules on Use of Mining Service Affiliates

Coal accounted for the largest share of strategic commodity exports monitored by PT Danantara Sumberdaya Indonesia (DSI), with the overall monitored export value reaching US$25.5 billion. The monitoring forms part of Indonesia’s new strategic commodity trade governance framework, which is designed to improve transparency across export transactions and strengthen oversight of pricing, invoicing and foreign-exchange proceeds. Under the framework, DSI tracks transaction information while producers and exporters retain their commercial role in negotiating prices, specifications and contracts with overseas buyers. Coal is among the initial commodities covered by the system, alongside other strategic Indonesian exports, reflecting its significant contribution to the country’s commodity trade.

PT Danantara Sumberdaya Indonesia (DSI) CEO Luke Thomas Mahony said Indonesia’s planned coal trade governance framework will not replace the role of private companies in coal trading, with producers and exporters continuing to negotiate contracts, specifications and prices directly with buyers and manage commodity and payment flows. Instead, DSI will focus on increasing transaction transparency and visibility, linking information from initial contracts through final settlement—including pricing formulas, coal quality, premiums and discounts, vessel information and invoices—to identify potential under-invoicing or inappropriate transfer pricing. Mahony stressed that deviations from benchmarks do not automatically indicate irregularities, as legitimate commercial adjustments can reflect differences in coal quality and transaction terms. DSI also plans to establish an industry-representative methodology committee, involving producers, associations, traders and market practitioners, to help determine appropriate reference prices and legitimate adjustments around those benchmarks.

Global steel flows grew by 1% year-on-year in July 2026, largely driven by surging Chinese and Indian exports. However, shifting trade dynamics are expected in the fourth quarter as the European Union's strict "Melt and Pour" origin tracking mandate takes effect on October 1, 2026. The new regulation will effectively cut off the widespread practice of nations importing lower-cost Chinese crude steel, rerolling it, and selling it into the EU as local material—a shift expected to heavily impact Turkey, which sources roughly 20% of its steel demand from China and sends 28% of its exports to the Mediterranean.