One of the world’s biggest coal producers is battling a summer of blackouts, leaving homes and businesses across Indonesia with erratic power. The crisis stems from significant production cuts, including a reduction of the mining quota to 600mn tonnes from 790mn last year. This, combined with rising costs linked to the war in Iran, has slowed output in the third-largest producer of thermal coal.

At the heart of the crisis is the domestic market obligation (DMO), which requires miners to sell a quarter of their output to local buyers at a capped price of $70 per metric tonne. This policy has encouraged some buyers to pay non-compliance penalties rather than sell locally. President Prabowo Subianto has ordered state utility PLN to speed up the handling of power outages.

Indonesia relies on cheap coal for its nickel processing sector, a cornerstone of the global electric vehicle supply chain. Experts suggest that accelerating renewable energy deployment is the necessary long-term solution to reduce reliance on coal and strengthen energy security.