The Potential of Coal Mining Industry in Java

Discovering the Future of the Coal Mining Industry in Java

  • InCorp Editorial Team
  • 16 May 2024
  • 6 reading time

People often find the well-known coal mining landscape outside Java Island in Indonesia. However, the government is now looking inside Java to ensure the industry’s future. 

Indonesian coal mining on Java Island holds significant promise for economic growth and energy development. With abundant coal reserves awaiting extraction, Java is a pivotal region in Indonesia’s coal mining landscape.

Why Starting A Coal Mining Business in Java?

Indonesian Statistics (BPS) data indicates that Java Island still contributed the largest share of Indonesia’s economic growth in 2023. It accounted for 57.05% of the 2023 GDP, followed by Sumatra Island at 22.01%.

Meanwhile, economic growth on Java Island in 2023 reached 4.96%, while Sumatra Island recorded a growth rate of 4.69%, below the national average economic growth rate.

Moreover, Java is also one of the largest regions in Indonesia in terms of coal production capacity, despite being smaller than the potential in the Kalimantan and Sumatra Islands.

In 2020, Java Island had 58.5 million tons of coal resources, with reserves amounting to 7.23 million tons. This number indicates the potential of a coal mining industry in Java. 

The Advantages of Coal

Despite the ongoing energy transition, coal benefits our country and citizens significantly. According to Irwandy Arif, from the Minister of Energy and Mineral Resources, some of these advantages include

Affordable and Reliable Energy Sources

Coal remains one of the cheapest and most reliable sources of energy. Coal-fired power plants still power all electricity sources in Java Island. Indonesia’s coal wealth, estimated at USD 4 trillion, comprises two-thirds of the country’s total mineral and coal mining wealth.

National Economic Resource

Revenue from coal mining for the country in 2021 amounted to USD 47 billion, or around IDR 733.9 trillion. According to data from the Ministry of Energy and Mineral Resources, Non-Tax State Revenue (PNBP) from the mineral and coal mining sector in 2023 reached IDR 173 trillion, surpassing the 2023 target of IDR 146.1 trillion.

The PNBP target for the mineral and coal mining sector 2024 is “only” IDR 113.5 trillion. Coal contributes about 70% of this estimated wealth.

Downstream Potential

Coal’s downstream potential is still highly feasible, which can increase the added value of domestic coal production. Indonesia’s coal mining resources reach 99.19 billion tons with total reserves of 35.02 billion tons. Therefore, coal can remain Indonesia’s primary energy source for 20 years.

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Coal Mining Potential in Java

Java Island has a vast potential for coal mining, with reserves reaching 58.5 million tons and production at 7.23 million tons. Several areas on Java Island have coal potential, including:

  • Banten: Pandeglang, Lebak, and Bayah. This area has bituminous coal, widely used for coal-fired power plants (PLTU), and lignite coal, commonly used for PLTU and industrial combustion.
  • West Java: Bogor, Sukabumi, Garut, Purwakarta, Cianjur, and Cirebon. This region has both bituminous and lignite coal, which are extensively used for PLTU and industrial combustion. It also has peat coal, primarily for hydroelectric power plants (PLTA).
  • Central Java: Wonogiri, Cilacap, Kebumen, and Banjarnegara. Bituminous and lignite coal are predominantly utilized for PLTU and industrial combustion. Additionally, it has peat coal for PLTA.
  • Yogyakarta: Kulon Progo Regency. Bituminous and lignite coal in this area are widely used for PLTU and industrial combustion.
  • East Java: Lumajang, Malang, Jember, Banyuwangi, and Pacitan. This region boasts bituminous, lignite, peat, and natural gas coal.

8 Tips on How to Start a Successful Coal Mining Company in Java

Establishing a coal mining company can be challenging, but it can also be advantageous. Here are some tips to help you start.

The Potential of Coal Mining Industry in Java

How Do You Start A Coal Mining Company in Java?

There are several aspects to consider for a company that aims to establish mining facilities in Java. Those are:

Permits and Regulations

Various types of mining licenses are applicable in Indonesia:

Permit TypesDescriptions
Exploration Mining Business License (IUP)Permits are necessary for conducting general investigation, exploration, and feasibility studies. 
The validity period must be taken seriously. It ranges from three years for non-metallic minerals to seven years for coal and specific non-metallic minerals and up to eight years for metallic minerals.
Exploration Special Mining Business License (IUPK)Similar to the IUP but granted directly by the Ministry.
Production Operation Mining Business License (IUP)Issued after the Exploration Mining Business License (IUP) for conducting production activities like construction, mining, processing, and sales transportation.
Production Operation Special Mining Business License (IUPK)Similar to the IUP but issued directly by the Ministry instead of the local government.
Mining Business License for Special Production Operation for Processing and/or PurificationValid for 30 years and extendable every 20 years, this permit enables buying, transporting, processing, and refining activities.
Mining Business License for Special Production Operations for Transport and SalesPermits for buying, transporting, and selling mineral or coal mining commodities are valid for up to 5 years and extendable every five years. 

Regulations are issued either by the Governor or the Ministry depending on the operational area’s coverage.
Mining Service Business License (IUJP)The IUJP is authorized to conduct essential mining service operations covering all phases and aspects of mining activities.

Its initial validity is five years, extendable in increments of 5 years. 
The Governor grants authorization within the province, while outside the province, it is issued by the Ministry.

Infrastructure Development

When applying for mining business permits, you must provide information on the type, quantity, condition, and location of the equipment used, particularly for mining and construction activities. 

If your company does not own equipment, then you only need to inform them about the ownership of such equipment.

Technology and Manpower

Every company engaged in mining activities must have a human resources organizational structure including:

  • The head of the mining inspectorate recognizes, and the head of mining engineering approves an operational supervisor (PJO) with competence in operational supervision or certification/qualification.
  • Experts with expertise relevant to the type, field, and sub-field of business, as evidenced by competency certificates.

Community Engagement

Businesses prioritizing public feedback showcase their sustainability and commitment to social responsibility. An open communication channel fosters trust and strengthens their bond. Mining companies must ensure a transparent, accessible, and effective complaint resolution system.

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Unlock Coal Mining Potential in Java with InCorp

Java Island boasts vast potential for coal mining, but initiating operations in this sector demands considerable time and effort. 

Given the environmental impact of coal mining activities, securing the necessary environmental permits is crucial to meeting regulatory standards, and InCorp Indonesia is equipped to assist you in this regard. 

Our comprehensive offerings encompass obtaining essential business licenses and environmental permits, ensuring full compliance with legal and environmental standards. 

Contact us for further information and assistance in realizing your mining ambitions by completing the form below.

Daris Salam

COO Indonesia at InCorp Indonesia

With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships.

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Frequent Asked Questions

There are two main types, namely, primary business licenses and non-primary business licenses. The primary ones commonly apply to various industries, such as general and industrial business licenses. Additional non-primary ones are included, depending on the operations of your business. Examples of non-primary business licenses are operational and commercial licenses.

Yes, you must apply for it to be able to issue work permits for your foreign employees. This permanent business license is also a prerequisite for the applications for other business licenses and import licenses.