Indonesian coal mining - where is the funding coming from?

14 minute read

Thermal coal is the dirtiest form of energy. Asia Pacific still relies heavily on thermal coal to produce electricity, mostly imported from Indonesia, which has about 60-65 years of reserves left in the ground.

The country itself is using this coal to support electricity generation by its domestic utilities, with coal representing 61% of the country’s energy mix in 2021.

Despite some talks underway to phase out coal, greater focus is needed on engaging with coal mining if Asia Pacific’s growing greenhouse gas emissions are to be reduced.

In this report, we assess whether funding remains available to coal mining firms, despite the public commitments of major banks to end their support to the sector. We make the following findings.

The restriction on capital by international lenders has resulted in what appears to be a plateauing of implied carbon emissions for Indonesian coal miners. Regional and domestic banks are still lending and need to be engaged to close the few open channels that remain.

For a few more years, Indonesian coal mining companies can rely on cash earned in times of high coal prices, but they will ultimately have to cut their investments.