How Indonesia's Coal Benchmark Price Affects the Global Market [Indonesia Coal Industry Conference]

At the 2025 Indonesia Mining Conference & Critical Metals Conference - 2025 Southeast Asia Tin Industry Conference, hosted by SMM Information & Technology Co., Ltd. (SMM), supported by the Indonesian Ministry of Foreign Affairs as a government supporter, and co-organized by the Association of Indonesia Nickel Miners (APNI), the Jakarta Futures Exchange, and China Coal Resource, Ashok Mitra, Director and CEO of PT Kaltim Prima Coal, shared insights on "How Indonesia's Coal Benchmark Price Impacts the Global Market."

He elaborated from perspectives such as seaborne thermal coal, international coal price indices, coal futures prices, and coal price indices.

Coal Benchmark Price (HBA)

Below is a summary of the HBA formula:

1. According to Article 159, Paragraph 1 of Presidential Decree No. 96/2021, coal sales must reference the benchmark price.

2. The determination of HBA and HMA will be announced on the 1st and 15th of each month, with the following formulas:

•HBA on the 1st = (0.7 * x1) + (0.3 * x2);

X1 = w4 from two months prior to one month prior

X2 = w2-w3 from one month prior

•HBA on the 15th = (0.7 * x1) + (0.3 * x2)

X1 = w2-w3 from one month prior

X2 = w4 from two months prior to one month prior

Example of ePNBP System Data Entry:

If the FOB price is lower than the HPB price, additional royalties must be paid on the difference between HPB and FOB prices. Furthermore, additional taxes must be accrued/paid on the difference between HPB and FOB prices.

Royalties

•Starting from 2025, the royalty rate for domestic industries, excluding smelters, has been adjusted to 14%. This adjustment is to implement the provisions of ESDM Ministerial Decree No. 58.K/HK.02/MEM.B/2022 ("Regulation on Coal Sales Prices to Meet Domestic Industrial Raw Material/Fuel Needs") issued on April 11, 2022, which stipulates an HBA price of $90 for domestic industries excluding smelters, and Presidential Decree No. 18/2025 (PP), which imposes a 14% royalty rate on coal sales at regulated prices (i.e., HBA $70 and HBA $90).

•Starting from March 25, 2025, in accordance with ESDM Ministerial Regulation No. 9/2025, royalties for each coal shipment must be settled within 60 calendar days after the B/L date. Discussions are currently underway with Perusahaan Listrik Negara (PLN) regarding solutions for barge CIF shipments, which may experience delivery delays due to various issues such as weather conditions and arbitration sampling requirements, potentially causing invoicing to exceed the 60-day time limit.

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