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Case Study

How Do Coal Mining Companies in Indonesia Support Regional Development for a Post-Coal Economy?


Despite having only 3.2% of the world’s coal reserves, Indonesia is the world’s third-largest coal producer after China and India. The country’s coal production is concentrated in four provinces in Kalimantan and two in Sumatra.

This case study includes examples of best practice from Indonesian coal companies in conducting activities to support local economic development during the exploitation and mine closure stages.

It delves into initiatives from Kaltim Prima Coal in East Kalimantan and Bukit Asam Ombilin in West Sumatra.

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The case study outlines how, in the early stages, the company should invest in the identification of “local champions,” both in regional government and in communities and local non-governmental organisations (NGOs). These champions are important in initiating discussions on regional sustainable development, community empowerment, and economic diversification. They can also facilitate the participation of the right representative to ensure broad representation for input and dialogue during key stages of the mine life cycle.

Companies also need to strike a good balance between conventional “community development” programmes, which specific stakeholders may expect, and long-term capacity building and investment that provide a lasting legacy. The capacity building should include enhancing any existing sources of livelihood, e.g., by advancing technical, business, and management skills to spur new economic developments.

In this case study, no examples of companies applying best practices at every single mining stage were found. The lack of such examples is due to several factors, such as limited funding, different priorities or company values, and weak governance.

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