Indonesia to Bring Back RKAB System to Address Oversupply and Market Manipulation

Indonesia is taking steps to address oversupply, price instability, and regulatory issues in the mineral and coal sectors by reinstating the annual issuance of mining work plan permits (RKAB) starting in 2026. The move comes after Minister of Energy and Mineral Resources (ESDM) Bahlil Lahadalia announced the decision during a hearing with lawmakers from the House of Representatives (DPR) Energy Commission XII.

Bahlil emphasized the need to balance domestic and export needs with production plans to prevent market manipulation. He highlighted concerns about the discrepancies between approved production volumes and actual industry absorption, citing the example of bauxite where 45 million tons were approved under RKAB but only 20 million tons were absorbed by the market, leading to oversupply and price collapses.

The Minister stressed the importance of ending games in the mining sector, stating that companies must adhere to production limits set in the RKAB permits. He emphasized stricter oversight of smelters and mining operations in integrated industrial areas to ensure accurate reporting of volumes and quality matched RKAB approvals. Real-time monitoring teams will be deployed to prevent misreporting and discrepancies in reporting.

Bahlil also addressed concerns about illegal sales and irregularities in land-based mineral sales, pledging to introduce new regulations and surveillance mechanisms to prevent abuse and protect state revenue. He emphasized the need for collaboration between the government and businesses while asserting that no company is above the state. Bahlil stated that companies must comply with regulations, and any violation of national dignity will be promptly addressed.

Indonesia, as the world’s largest exporter of thermal coal and a significant producer of nickel and bauxite, has faced scrutiny over permitting, environmental violations, and reporting practices in the mining industry. The decision to reinstate annual RKAB evaluations represents a significant policy shift that could impact hundreds of mining firms operating under multi-year permits and potentially tighten commodity supply in the short term, which may support commodity prices.

The government’s focus on addressing oversupply, market manipulation, and regulatory oversight in the mineral and coal sectors through the reinstatement of the RKAB system underscores Indonesia’s commitment to strengthening its mining industry and protecting national interests from external influences. With stricter monitoring and surveillance measures in place, the government aims to ensure compliance with production limits, prevent abuse, and maintain transparency in the mining sector to support sustainable growth and development.