The South Sumatra Basin is one of the most prolific coal basins in Indonesia. Most of the coal from this area is used as thermal coal. Seredin and Dai (2012) explained the importance and significance of coal deposits as potential sources for rare earth elements and yttrium (REY); the concentrations of these elements in coal are similar to their abundances in conventional REY deposits. Production of the REY in coal deposit is mainly from the coal's fly/bottom ash. Examination of coal with high REY concentrations is becoming a very important issue. The study area is located in the Banko coalfield, Sumatra, Indonesia. This area is one of the best candidates for studying REY in coal because there are tuffaceous mudstone layers (tonsteins) reported by previous researchers that may have enriched the coal in REY. For this study, coal and non-coal beds from the same stratigraphic interval were sampled and analyzed using thin and polished section, X-ray diffraction (XRD), inductively coupled plasma atomic emission spectroscopy (ICP-AES), and inductively coupled plasma mass spectrometry (IC-PMS). Special attention was given to coals near the tonstein layers. Based on the data collected, it was concluded that all the tonsteins studied are of volcanic origin and are silicic and alkali tonsteins. The elements Al and Si are higher in coal samples collected just beneath the tonstein layers and the highest REY concentration found was in a sample beneath a silicic tonstein layer. These data suggest that there is an opportunity to extract REY from coal's fly/bottom ash because the REY content of the ash is as much as 10 times higher than the REY content of the coal feed to power plants.