Coal’s Reality Check vs Green Fairy Tales
Jun 19, 2025
Cut the fluff—coal isn’t dead in Indonesia. It’s alive, kicking, and smack in the middle of the country’s energy reality.
Despite what the IEA and green pundits chant, coal still powers ~66% of Indonesia’s grid—a figure projected to remain high through the late 2020s (reuters.com). New coal plants? Being built. Renewables? They’re growing, but they’re decades from replacing baseload.
Even with billions in transition funds, the Indonesian government greenlights new coal infrastructure. Guess why? Renewables can’t keep the lights on yet. Intermittency, infrastructure hurdles, and capital costs tie renewables to stories, not reality. Nuclear? Politically radioactive. Coal, gas, oil? Cheap, proven, always there.
Demand Dynamics – Industry Outpaces Hype
Urbanisation, industrialisation, nickel smelters—Indonesia’s growth engines depend on reliable power. Domestic coal demand isn’t slowing; captive plants are expanding. Exports dipped ~12% in early 2025, but that’s a blip—inventory cycles, regional policy shifts—not a structural shift (ft.com).
Countries like China and India still import coal in huge volumes—swings, yes, but not collapse. Meanwhile, Southeast Asia (Vietnam, Philippines) is picking up the slack.
EA and Forecasting Follies – Political Modeling over Real-World Sense
The IEA likes to sell narratives of orderly, rapid green transitions—a dream world ignoring cost curves, capacity gaps, state utility mandates, and political inertia. Forecasts projecting a coal drop by 2027 assume perfect execution and global alignment—newsflash: grids fail, transitions stall, funding doggedly slow. Indonesian planners know this—they’re building more coal plants, not fewer (reddit.com).
It’s not ignorance—it’s pragmatism. Coal remains the foundation of industrial growth, and forecasts that assume otherwise? Fantasy.
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MBAP – On the Frontline, Not on the Funeral Pyre
Stock Snapshot & Fundamentals
• Share price: ~1,770 IDR, down ~0–0.3% today, off ~35% YTD, ~40% YoY (idnfinancials.com).
• Valuation: P/E ~6.8× vs peers ~27×—deep value land.
• Dividends: Yield ~18% (Rp38/sh for FY2024)—payout ratio ~15%.
• Earnings: FY 2024 revenue ~US$218M (-3%), net income ~US$19M (-12%).
Production & Targets
• 2024 production set to 2.01 Mt (–4%), sales aim 2.3 Mt (+8%) (argusmedia.com).
• Capex US$58M in 2024; ramp to US$70M in 2025, with ~67% poured into renewables (solar & pellets).
Strategic Outlook
• Short-term: 2 Mt output steady; domestic/SEA demand limits export dips. Margins hold if MBAP controls costs.
• Medium-term: ASEAN & industrial demand may grow, lifting sales 5–10% by 2027. Low cost base + stable PE = upside.
• Risks: export softness, ESG push, policy whiplash—but none derail baseline demand.
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Mass Psychology & Vector Analysis
Markets hate complexity—they prefer black or white. The MBAP share price collapse? Fear driving momentum. But vector analysis — the product of trend and sentiment—favors stability. Behind the fear signals are strong fundamentals and underpriced stability. Crowd psychology may give coal a black eye; rational analysis shows a steady, resilient vector.
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Integrated Narrative
Indonesia’s 2024 coal record: 836 Mt produced (+8% YoY), yet exports hit a three-year low in Jan–Apr 2025 (argusmedia.com, ft.com, apnews.com). That’s China & India cutting back amid domestic production, but the thirst is simply shifting—Vietnam, Thailand, domestic industrial is taking the slack (reuters.com).
Despite the export dip, global coal prices dropped to four year lows—making coal the cheapest baseload fuel in Asia and squeezing gas and renewables alike (reuters.com). So natural gas projects falter—delays, lack of funding, and fierce coal pricing.
MBAP chipped in US$46.9 M of its US$70 M 2025 capex into renewables—solar (growing from 17 to 51 MWp) and biomass pellets (target 150k tpa operational by 2026) (idnfinancials.com). Smart—but not a pivot away. Coal remains the cash cow funding renewables.
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Why Forecasts Are “Essential Rubbish”
• Missed reality: Agencies forecast coal decline by mid-decade, yet Indonesia is expanding output and maintaining ~66% coal grid share (reddit.com).
• Political bias: IEA and lobbyist projections are built on green narratives, ignoring local politics, grid constraints and regional nuances.
• Green dreams vs on-ground limitations: Batteries, grids, storage—all fantasy until priced down and built at scale. Indonesia must add 8 GW renewables yearly to hit its 2040 coal exit plan—so far, averaged 0.66 GW/year (reddit.com).
• Emotional vs rational: Mass psychology sees “coal dead,” but ground-level economics say “keep the plant running.” Forecast errors multiply when models ignore vector reality.
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Hard Truth Forecast – 2025–2030
1. Domestic coal usage will stay high as electrification and industrial output grows—renewables can’t plug the gap soon enough.
2. Exports wobble with China/India inventory cycles, but SEA & domestic markets cover dips.
3. Prices stay under pressure in the short term, but tight supply and industrial demand will re-tighten markets by 2026–27.
4. MBAP remains cash-flow strong: low P/E, high yield, moderate earnings decline. Renewables capex improves long-term optionality without derailing core operations.
5. Forecasts will keep failing. Until alternatives mature at grid-scale, coal stays essential—everyone else is Don Quixote wielding solar panels against windmills.
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Bottom Line
Forecasts from IEA or energy think tanks are not insight—they’re press releases. They peddle the tidy vision of a clean future while grinding assumptions about reliability, cost, infrastructure, politics under the rug.
Coal’s “demise”? A fantasy fueled by wishful thinking.
Renewables? A project, not a panacea.
MBAP? A value bet in plain sight—cheap, yielding, and grounded in demand realism.
Stop quixoting, start vectoring: coal’s alive, and as long as Indonesia builds factories, mines nickel, and powers homes, coal demand rides high. Any investor ignoring that is swinging at shadows.
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