Overview of Indonesia’s Mining Industry

Capital Jakarta
Official languages Indonesian
Religion Officially recognised:
Islam
Protestantism
Catholicism
Hinduism
Buddhism
Confucianism
Demonym Indonesian
Government Unitary presidentialconstitutional republic
President Joko Widodo
Vice-President Jusuf Kalla
Legislature People’s Consultative Assembly
Upper house Regional Representative Council
Lower house People’s Representative Council
Area
Land 1,904,569 km2 (15th)
735,358 sq mi
Water (%) 4.85
Population
2015 estimate 255,461,700
2010 census 237,424,363 (4th)
Density 124.66/km2 (84th)
322.87/sq mi
GDP (PPP) 2015 estimate
Total $2.840 trillion (8th)
Per capita $11,135 (102nd)
GDP (nominal) 2015 estimate
Total $895.677 billion (16th)
Per capita $3,511 (117th)
Currency Indonesian rupiah (Rp) (IDR)

Overview

  • The country is blessed with abundant world class deposits and a history of successful mining projects.
  • The mining sector has been one of the key sectors supporting Indonesia’s economic growth for a number of years. The sector makes a significant contribution to Indonesian GDP, exports, government revenues, employment, and perhaps most importantly, the economic development of the remote regions where mining operations are located.
  • A new more business friendly government has just been inaugurated and is offering hope to grow the industry.
  • Coal makes up for 9% of exports globally and 95% of exports from ASEAN. The country has a repository of coal equivalent to that of the US.
  • There are more than 500 mining projects and operating properties making the country the most important mining country in the region.
  • There are three large international mining companies with long term operating experience in Indonesia: Vale, Newmont & Freeport McMoRan.
  • Many Canadian mining engineering and supply companies are entrenched in Indonesia. There is a great respect and opportunity for Canadian services and supplies.
  • Canada’s Redpath has spent the past 32 years contracting at Freeport’s Grasberg mine and presently have 1200 workers on site. Redpath is developing the massive underground expansion plans which will grow UG production from 100K tpd to 200K tpd making it one of the largest and longest term underground mines in the world.

Projects

Agincourt Resources gold
ANTAM (Persero) nickel, bauxite, iron sand, silver, gold
Batutua Tembaga Raya copper
Freeport Indonesia copper, gold
Cibaliung Sumberdaya gold
Harita Prima Abadi Mineral bauxite
Koba tin
Newmont Nusa Tenggaragold silver
Nusa Halmahera Minerals gold
J Resources Asia Pasifik gold
Rio Tinto Indonesia gold
Sebuku Iron Lateritic Ores iron ore
Meares Soputan Mining gold
Vale Indonesia nickel
  • Adaro Energy is engaged in development of infrastructure, trading, logistics and power generation. Adaro also offers mining contractor services, materials hauling and workshop activities. Adaro is the largest coal mining operation in Indonesia and also the world’s largest truck/shovel mining operation in the world with 350 haul trucks and 22,000 employees. The company is presently developing a strategy to re-size its fleet with major expansion plans in the future.
  • Antam is an integrated, export-oriented, diversified state owned mining and metals company with operations located throughout the mineral rich archipelago of Indonesia. ANTAM undertakes all mining activities including exploration, excavation, processing, and marketing of nickel, ferronickel, gold, silver, bauxite and coal. The company develops joint venture partnerships with international companies to bring in expertise and capital.
  • Freeport-McMoRan Grasberg has begun mining their Block Cave mine and the Deep Mill Level Zone (DMLZ) project. Production commenced in 2015, evolving the mine from an open pit to one of the largest and long term underground mines of the future. Grasberg is the largest gold mine in the world and one of the largest copper mines. Freeport continues to look for the latest technologies to improve efficiencies and safety programs in their $17B expansion plans. There is a great need and interest for new technologies including automation, safety and environmental solutions that offer opportunities for Canadian supply and service companies.
  • BHP Billiton operates the Indomet coal project, a joint venture with Adaro Energy. This project consists of an estimated 774 million tonnes of coal reserves in five coal deposits, spread over an area of 865,000 acres.
  • Vale Indonesia since the 1970’s has developed and operates a lateritic nickel deposit on the Indonesian island of Sulawesi. Vale is listed in the top 100 companies in Asia with the highest sustainability performance. Vale is presently developing an in country smelting capacity to comply with Indonesian law.
  • Newmont operates Batu Hijau, a large, surface mine operation, primarily producing copper and small amounts of gold and silver. Originally discovered in 1990, commercial production began in 2000. The Batu Hijau mine is located on the island of Sumbawa. The company is presently developing plans to comply with in country smelting operations.
  • Asia Mineral Corporation, Bracken International Mining, Kupang Resources and Western Mining Network Ltd are all developing high grade manganese deposits in Indonesia.

Opportunities

  • Indonesia is the strongest potential in SE Asia for mining supply industry growth.
  • The Government regulating ore processing is encouraging investment in downstream value, as companies have announced investments in Indonesian based processing facilities.
  • Local representation for Canadian mining suppliers is a must. Strong industry service partners are available and looking for quality mining solutions
  • Always understand who the key EDC player is in the region you are expanding into. EDC offers guidance for Canadian mining suppliers and also major funding for mining companies on their new projects. Get you value into the equation as EDC spends Canadian dollars.
  • The Canadian Trade Commission Service is critical to building and implementing your strategy into a new market. Always introduce yourself to the TCS before doing business in a new country.
  • Comprehensive mining intelligence reports are available and are considered an important early step to developing strategy into the SE Asia region.

Challenges

  • The country is dealing with restrictive mining legislation enacted during a period of low mineral prices. In 2009 the Indonesian government carried a law that restricted the sale of raw ore out of the country. In 2014 the law took hold and the result was a calamitous shake up of the nickel, copper and gold industries.
  • Presently the mining industry is working with the government to find compromise solutions to keep mining. There is light at the end of this tunnel as the majors have or are near agreements to keep their properties mining. Although the present situation is serious there is every reason to believe that the Indonesian mining industry will project a strong forecast of growth.
  • Resource nationalism is being discussed at a level consistent with many emerging countries.

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