Mining
From The Report: Indonesia 2014
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Buffeted by volatile global commodity prices and legislative uncertainty at home, Indonesia’s mineral output has fluctuated considerably in recent years. The mining sector comprised 11.24% of GDP in 2013, down slightly on 11.8% in 2012, but an improvement on the 8.94% recorded in 2004. Coal contributed $26.64bn to domestic exports in 2013, followed by copper ore at $3.38bn, nickel ore at $1.88bn and bauxite at $1.39bn. Key importers of Indonesian coal include China, India, Japan and Korea, though the expected rise in domestic consumption is also likely to affect demand and production going forward, with several new coal-fired power plants set to be built in the coming years. In spite of challenges, the country’s vast potential resource still provide substantial growth opportunities. With mineral prices expected to stabilise as emerging economies increase their demand for the country’s raw materials, domestic and foreign mining outfits should find further incentive to continue exploration and development plans, provided uncertainty around the legislative framework is addressed.
This chapter contains interviews with Martiono Hadianto, President Director, Newmont Nusa Tenggara; and Arsjad Rasjid, Vice-President Director and Group CFO, Indika Energy.

Articles from this Chapter

Overview

Moving into gear: Key changes to the legal framework buoy the sector’s prospects
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Buffeted by volatile global commodity prices and legislative uncertainty at home, Indonesia’s mineral output has fluctuated considerably in recent years. After recovering from a commodity price slump starting in 2008, the sector picked up steam in 2011, in part due to rising demand from emerging economies, resulting in higher levels of both prices and output for Indonesia. These gains proved short lived, however, as prices again receded in 2012 (except gold), resulting in most mining operations…

Analysis

Golden promise: More transparent governance may encourage gold and copper activity
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Home to the world’s second-most productive copper mine, and the largest gold mine in terms of reserves, Indonesia has positioned itself strongly among the world’s largest precious mineral producers. Although gold production across the archipelago has traditionally been extracted as a by-product from large-scale copper mines, the revenues generated from gold sales are far from an afterthought. Almost one-third to half of the country’s gold production, along with nearly one-third of copper output,…

Analysis

Divesting interest: New framework for contracts and business licences
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As part of Indonesia’s push to ensure that more benefits from resource extraction carried out by mining activity are preserved and reinvested domestically, the government is revamping the framework regulating mining contracts. This is aimed at facilitating greater local participation in operations and securing a larger proportion of revenues for the state. The overhaul of the longstanding Contracts of Work (CoW) regime for foreign companies and the separate mining rights, or kuasa pertambangan…

Interview

Martiono Hadianto, President Director, Newmont Nusa Tenggara: Interview
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Interview:Martiono Hadianto From a regulations perspective, how will the ban on mineral ore exports impact mining companies? MARTIONO HADIANTO: There are several new commitments that we are being asked to make that would significantly impact our business. Firstly, mining companies are being asked to commit to refining their mined products domestically. Currently, only about 20% of our product is refined in Indonesia, meaning that we would have to commit to the remaining 80% also being refined…

Interview

Arsjad Rasjid, Vice-President Director and Group Chief Financial and Operating Officer, Indika Energy: Interview
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Interview:Arsjad Rasjid Is land acquisition still the main challenge for private investment in power, mining and related infrastructure? Where can the government assist? ARSJAD RASJID: While the government policy is angled towards developing value-added industry, these new processing plants and accompanying infrastructure all require energy. In order to secure requisite private sector investment, there needs to be far greater coordination among different ministerial departments. The government…