How Indonesian coal is priced: HBA, HPB and the indexes

An Indonesian coal mine works with two kinds of price. One is the market price agreed with a buyer, usually linked to an index and adjusted for quality. The other is set by the government. It decides the royalty and, since March 2025, the floor for export sales. From 2027 a state company will also stand between the mine and its foreign buyers.

A revenue model that uses only the market price will be wrong. The gap between the two, and the rules around it, can decide whether a lower-grade mine makes money.

The reference price (HBA)

The coal reference price (Harga Batubara Acuan, HBA) is set by decree of the Minister of Energy and Mineral Resources. Since March 2025 it has been published twice a month, on the 1st and the 15th, and each decree applies for about two weeks. It’s set for four calorific bands: 6,322, 5,300, 4,100 and 3,400 kcal/kg GAR.

The ministry calculates the HBA mainly from prices that miners report in their royalty filings, with a lag. That makes it a record of recent sales rather than a live market price. When the market falls, the HBA can sit above what buyers will pay for a few weeks. When it rises, the HBA trails behind.

From HBA to HPB

A mine rarely sells exactly one of the four reference grades. Each period the HBA is turned into a coal benchmark price (Harga Patokan Batubara, HPB) for each actual quality, adjusted for calorific value, moisture, sulphur and ash.

The two benchmarks matter for two reasons. The royalty is worked out against the HPB, so a sale made below it still pays royalty as if it had been sold at the benchmark. And the HBA sets the royalty rate itself for many licences, because rates rise in steps as the HBA rises. The rates are covered in coal royalties and taxes. Coal sold to domestic power plants under the domestic market obligation follows its own capped price, set out in the DMO article.

Export rules in 2025 and 2026

Energy and Mineral Resources Minister Decree 72.K/MB.01/MEM.B/2025, signed on 24 February 2025, required exporters to use the HBA as the basis for export sales from 1 March 2025. Until then most contracts had been priced off market indexes such as the Indonesian Coal Index (ICI) or Newcastle coal futures. The ministry said the aim was to stop coal being sold too cheaply.

Buyers resisted, because the HBA was then running above the indexes. Trading slowed in the first days of March, and the ministry cut HBA values in the second half of the month. Shipments to China in April 2025 were about 20% lower than a year earlier. The ministry put that down to weaker Chinese demand rather than the rule. Existing long-term contracts were allowed to keep their own price formulas.

A larger change came in 2026. Government Regulation 24 of 2026, in force since 1 June 2026, made coal a strategic export commodity. Under Trade Minister Regulation 15 of 2026, coal exports can only be made through a state export company, PT Danantara Sumberdaya Indonesia (DSI). Until 31 December 2026 miners still sell to their buyers directly, but they report each sale to DSI, and each shipment needs a registered coal exporter licence (Eksportir Terdaftar Batubara) and a report from an appointed surveyor. From 1 January 2027 DSI is due to be the only coal exporter. Danantara has said prices won’t be set unilaterally and will reflect quality, specification, logistics costs and contract terms. How that works shipment by shipment, and what margin DSI keeps, is something to confirm before you rely on any export price.

Market indexes and sale terms

Outside the government’s prices, Indonesian coal trades against market indexes compiled from deals and surveys of buyers and sellers. The ICI is published weekly for several Indonesian grades loaded in Kalimantan. Newcastle prices, for higher-grade Australian coal, set the tone for the region. Delivered prices into southern China and India matter too, because those two countries are Indonesia’s biggest buyers.

The sale term moves the price too. Under FOB barge, the buyer takes the coal on a barge at the seller’s jetty and pays for the river trip and the loading onto the ship. Under FOB vessel, the seller delivers the coal onto the ocean vessel, usually at an offshore anchorage, and carries the barging and transshipment cost. Under CFR or CIF, the seller also pays the sea freight (and, under CIF, the insurance) to the buyer’s port. Comparing prices across these terms means adding or removing those costs first. How much they come to in Kalimantan is covered in hauling, barging and ports.

Quality adjustments

A coal contract names a typical quality and limits. The price moves in proportion to the calorific value actually delivered against the typical value in the contract. Excess moisture, ash or sulphur usually brings a penalty, and coal outside the rejection limits can be refused.

The numbers come from an independent surveyor, who samples the coal at loading and issues the certificates of quality and weight that the invoice is built on. A mine that regularly ships below its contract quality earns less than its headline price suggests, and it shows up in those certificates.

Before you model a mine’s revenue

Ask for the sales record behind the price, not a single figure:

• sales contracts with their price formula, sale term and quality limits
• surveyor certificates and invoices for at least the last two years
• the HPB applied to each shipment and the royalty paid on it
• the share of output sold at home under the DMO, and at what price
• how each export contract has been reported to DSI since 1 June 2026

Then build the price from the index for the mine’s own grade, adjusted for its sale term and real quality. Check it against the HPB for the same coal, because the royalty follows the benchmark when the sale price is lower. And ask a mining lawyer how the HBA floor and DSI will treat any contract you plan to sign now, since the export channel changes on 1 January 2027.