JPM-Indonesia Commodity and Mining Thoughts on Indonesias potential export levy on coal and gold-20250716

Indonesia is considering an export levy on coal and gold to increase fiscal revenues(news). As the world’s largest coal exporter, accounting for >50% of the seabornethermal coal market, total coal exports amounted to ~$30bn in 2024 (~2% of GDP).The Ministry of Energy and Mineral Resources suggests the levy might be appliedduring periods of high prices, emphasizing that “businesses should share some ofthe earnings with the state.” We think it is unlikely the government will impose anexport levy on Indonesian coal in the current depressed price environment (ICIdown 20% YTD), but the potential regulation will likely weigh on stock valuationsfor the medium/longer-term. Additionally, we believe imposing a levy on nickelwould likely generate greater revenue potential relative to gold, as Indonesia is amajor producer of refined nickel but a net importer of gold. We are OW on ANTM/ADMR, N on ITMG/MDKA/INCO, and UW on PTBA/ADRO.

•Coal. Supply and demand dynamics remain unfavorable for a near-termIndonesian coal price recovery as the biggest importer (China) tilts towards anoversupply, driven by higher domestic supply (+7% YTD). A potential exportlevy could further reduce the appeal of Indonesian coal in the seaborne market,with China's imports already down 20% y/y in 2Q25. We estimate that a 5-10%export levy on coal could generate 0.7-1.4% in additional fiscal revenues (0.1-0.2% of GDP), assuming a 20% y/y decline in export value from 2024.However, this would likely be partially offset by lower export volumes. Whilethe government may only impose an export levy when prices are high, thepotential regulation could weigh on stock valuations across the coal complexin the medium-to-longer term. Link to recent report on Indonesia Coal.

•Gold. There are no clear statistics on Indonesia’s annual gold demand.Indonesia produces ~110-130 tons of gold annually, and a large portion issourced from the Grasberg mine (~60 tpa). ANTM’s gold sales volume was~45 tons and ANTM has the leading market share in minted gold bars. Thesetwo sets of data indicate that there’s excess gold being exported, which weestimate to be ~50 tons. However, data from Bank Indonesia and alsoconversations with ANTM indicate that Indonesia is also importing gold,which complicates the overall impact of a potential levy. We do not thinkimposing a levy on gold will generate significant revenues and we do not seeany negative impact to ANTM & MDKA even if a levy is implemented.