Indonesian coal faces three variables: diesel costs, RKAB production approvals, and export tax
AI summary card
Indonesian coal faces three variables: diesel costs, RKAB production approvals, and export tax
J.P. Morgan believes higher diesel prices, a reduction in 2026 coal RKAB, and a 5%-11% export tax will weigh on coal company earnings, but rising coal prices still leave its 2026 earnings estimates for ITMG/PTBA above market consensus.
- Diesel supply is not currently affecting production, but prices are up 35%-40% from pre-Middle East conflict levels, and fuel costs account for 15%-20% of coal miners' cash costs.
- If high diesel prices persist for the full year, coal miners' EBITDA could fall by 20%-25%; for every 10% increase in fuel costs, ITMG/PTBA EPS would decline by about 9%-10%.
- The government has approved 580 million tonnes of coal RKAB; the final figure could exceed 600 million tonnes, but it may still be about 15% lower than 2025 production of 790 million tonnes.
- Non-IUPK miners such as ITMG, ADMR, and UNTR face at least a 20% RKAB cut risk, though they can apply for revisions mid-year.
- The coal export tax is expected to be introduced this year, with a likely range of 5%-11%; using the 8% midpoint, EBITDA impacts for ITMG/PTBA/ADMR/UNTR are estimated at 27%/25%/9%/4%, respectively.
Report interpretation
Overview
This report focuses on three high-frequency investor questions for Indonesia's coal industry: diesel prices and supply, the 2026 coal production plan RKAB, and the impact of the coal export tax on earnings. The report argues that diesel supply is currently stable but prices have risen sharply, total RKAB volume may be lower than last year, and the export tax is also likely to be introduced within the year, so the sector faces short-term pressure from costs, volumes, and taxes.
Core views
The core view is: first, higher diesel prices have become an important cost-side pressure for coal miners, but they have not yet caused production interruptions; second, the final 2026 coal RKAB size may be above the announced 580 million tonnes and exceed 600 million tonnes, but it may still be about 15% lower than 2025 production of 790 million tonnes; third, if the export tax is implemented in the 5%-11% range, it will materially weigh on EBITDA for miners with high export exposure. Even so, J.P. Morgan believes its 2026 earnings forecasts for ITMG/PTBA remain 80%-90% above market consensus, mainly because it incorporates higher spot coal prices; even after factoring in higher diesel costs, its forecasts are still 20%-30% above the market.
Analysis framework
The report combines channel checks, policy-event tracking, and sensitivity analysis to assess the impact of diesel prices, sales volume changes, and export tax rates on EPS or EBITDA, and compares Indonesian coal-related stocks such as ITMG, PTBA, ADMR, and UNTR horizontally.
Methodology notes
Treat diesel costs, coal output, and export taxes as key variables and measure their impact on EPS or EBITDA.
The report shows the earnings impact of a 10% increase in fuel costs, a 10% change in sales volume, and an 8% midpoint export tax rate for different companies to identify each stock's main risk exposure.
Assess changes in sector supply and tax burden through government approval progress and ministerial statements.
RKAB affects the ceiling for coal output, while the export tax affects export profitability; both are important regulatory variables for Indonesia's coal industry.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- ITMG.JKIndonesian coal producer, rated OW
- Strengths
- Supported by the assumption of rising spot coal prices, J.P. Morgan's 2026 earnings forecast is above the market; sales volume changes have relatively high EPS leverage.
- Weaknesses
- Every 10% increase in diesel costs would reduce EPS by about 9%-10%; under an 8% export tax scenario, EBITDA would be hit by about 27%.
- Comparison
- Compared with ADMR and UNTR, ITMG is more sensitive to diesel costs and export taxes.
- Risks
- At least a 20% RKAB cut risk, export tax implementation, and sustained high diesel prices.
- PTBA.JKState-owned coal miner, rated N
- Strengths
- Its 2026 RKAB is 53 million tonnes, above 2025's 50-51 million tonnes, and it may be better able to avoid cuts than non-IUPK miners.
- Weaknesses
- Every 10% increase in diesel costs would reduce EPS by about 9%-10%; under an 8% export tax scenario, EBITDA would be hit by about 25%.
- Comparison
- Compared with non-IUPK miners, its output approval risk is lower; however, cost and tax sensitivity remains high.
- Risks
- Export tax, higher diesel prices, and weaker coal prices.
- ADMR.JKIndonesian coal-related company, rated OW
- Strengths
- Every 10% increase in diesel costs affects EPS by about 2%; under the midpoint export tax scenario, EBITDA impact is about 9%, which is lower than ITMG/PTBA.
- Weaknesses
- Every 10% change in sales volume affects EPS by about 9%, indicating high sensitivity to output changes.
- Comparison
- Its cost and tax impact is lower than ITMG/PTBA, but its sales sensitivity is higher.
- Risks
- Non-IUPK miners may face at least a 20% RKAB cut.
- UNTR.JKCompany with exposure to coal-related activities and mining contracting, rated N
- Strengths
- Every 10% increase in diesel costs affects EPS by about 2%; under the midpoint export tax scenario, EBITDA impact is about 4%, which is relatively low.
- Weaknesses
- It is still listed as one of the companies that may face RKAB cuts for non-IUPK miners.
- Comparison
- Among the four companies, it has the lowest EBITDA sensitivity to export taxes.
- Risks
- RKAB cuts, changes in customer capex, and regulatory uncertainty.
- AKRA.JKB2B diesel distributor
- Strengths
- As the second-largest B2B diesel distributor after Pertamina, the report says its customers currently face no supply risk.
- Weaknesses
- The report does not provide earnings sensitivity estimates for this company.
- Comparison
- Unlike coal miners, AKRA is more exposed to the diesel supply chain.
- Risks
- Diesel price volatility and supply chain policy changes.
Key data
- Diesel price increase35%-40%Up from pre-Middle East conflict levels.
- Fuel cost as a share of coal miners' cash costs15%-20%Used to gauge how diesel price increases are passed through to coal miners' costs.
- Potential EBITDA impact from high diesel prices-20% to -25%Assumes high prices persist for the full year.
- Approved coal RKAB580 million tonnesApproved by the Ministry of Energy; further approvals remain.
- Expected final RKABAbove 600 million tonnesStill potentially about 15% below 2025 production of 790 million tonnes.
- PTBA 2026 RKAB53 million tonnesAbove 2025's 50-51 million tonnes.
- Potential RKAB cut for non-IUPK minersAt least 20%Applies to ITMG, ADMR, UNTR, etc., though revisions can be applied for mid-year.
- Likely coal export tax range5%-11%The finance minister's latest remarks suggest it could be introduced this year.
- EBITDA impact from an 8% export taxITMG -27%; PTBA -25%; ADMR -9%; UNTR -4%Calculated using the midpoint of the 5%-11% range.
- Relative performance of Indonesian coal stocks vs JCI over the past monthOutperformed by more than 15%Primarily driven by foreign buying, while local investors remain cautious due to regulatory uncertainty.
Impact & implications
The investment implication is that sector valuations and earnings expectations will depend heavily on policy implementation details and whether coal prices can offset cost and tax pressures. ITMG and PTBA are more sensitive to diesel costs and export taxes, so their earnings volatility may be greater; ADMR and UNTR are less affected by export taxes, but they still face output approval risk. Foreign buying has driven the sector to outperform in the short term, but local investors remain cautious about RKAB and export-tax uncertainty.
Risks
- Diesel prices remain elevated or rise further, squeezing coal miners' cash costs and EBITDA.
- Final coal RKAB approvals fall short of expectations, especially if non-IUPK miners see production cuts.
- The coal export tax is implemented at the higher end of the range, creating a larger-than-expected hit to export-oriented miners' earnings.
- Regulatory uncertainty persists, affecting local investor risk appetite and sector valuations.
- If spot coal prices decline, some of J.P. Morgan's above-market earnings support may weaken.
- The report discloses that J.P. Morgan has conflicts of interest with some covered companies through market making, client relationships, potential investment banking business, or non-investment-banking compensation.
What to watch
- Whether the final coal RKAB total exceeds 600 million tonnes, and the approved quotas for each company.
- Whether non-IUPK miners such as ITMG, ADMR, and UNTR apply for and obtain mid-year RKAB revisions.
- The final export tax rate, scope of application, and rules by calorific value and price brackets.
- Whether diesel prices fall from current high levels and whether any supply shortages emerge.
- Whether Newcastle coal prices can continue to offset cost and tax pressure.
- Whether foreign buying can continue and whether local investor sentiment toward regulatory uncertainty improves.