The latest player on the international coal stage, alongside China, is Indonesia. The country has enjoyed one of the most rapid recent increases in coal production in the world, rising from 400,000 tonnes (t) in 1981 to 253 million tonnes (Mt) of coal in 2009. It is now the second largest exporter of hard coal in the world. Despite economic difficulties, coal production has not only been maintained but even extended and increasingly channelled into exports. The country produces around 30 to 40 Mt of lignite.
The policy pursued by post-Suharto governments of assigning autonomous rights to the provinces involves, among others, a shift in power away from the mining ministry towards provincial governments. The authorities there were hardly prepared for this or were unable to continue the necessary administrative work properly. Also, the mining law generally valid until now is practically suspended. Instead, the authorities are using their new powers to raise taxes and levies or are attempting to exert political influence over the mining companies. On top of this, comes a revitalisation of the unions, which are putting growing pressure on companies through strikes and plant occupations and also the financial demands of local townships. The consequence has been a serious worsening of the investment climate.
Indonesia was the second largest exporter of hard coal in 2009 with 230 Mt, after Australia with 259 Mt. Coal mining was hardly affected by the East Asian economic crisis during the years 1997/98. Coal production was extended and channelled into exports despite runaway inflation in the national currency and a wave of cancellations and delays in numerous coal-based IPP power plant projects and firmly agreed long-term coal supply contracts. A more momentous impact on the coal mining sector, however, has come from centrifugal political forces and the turmoil they have brought since the presidential change in 2000.