MINING INDONESIA
Recent legislation and price speculation mean good things for the mining industry.
Mining is a long-term investment; therefore, we need consistency of the government and policy. The recent changes create some concern for us, especially in the nickel segment. The government introduced the law and is generalizing minerals into one item. It is facing issues of exporting concentrate and the copper concentrate. Not all minerals are all equal. For nickel, Indonesia accounted for 30% of the global market share in 2011. Indonesia will always be an important nickel producer in the world, which is why nickel policy will have an impact on the global market. Our quality and grade is high compared to other countries in Asia. The policy of banning the export in 2014 revealed the trends. We are seeing the growth of value added—already USD6 billion in investment—and the process of value addition is happening. When the government imposed that law, development started to happen.
Infrastructure is important and will result in higher productivity and potentially lower energy and logistic costs, eventually translating into lower inflation as well. However, infrastructure is a long-term investment. PPPs are a great idea, but making them a reality is a long-term process. The investment climate has to be conducive, the policy has to be stable and supportive, and in some cases there has to be some central reform that needs to be done before a project can be viable. For the private sector, there must be an economic angle before this can work. China has also committed to balancing the price of coal. If the price of coal is too low, the industry will suffer. Around 85% of its coal comes from underground operations and, therefore the costs of operation are higher. Whereas in Indonesia, coal mining is mostly open pits and, therefore, cheaper. The industry seems to hope for it to remain at USD65-75 per ton. We are satisfied with that and believe in 2018 that the coal price will still be above USD75.
Our products are mostly exported to China. We initially exported all the ore to China; however, the government later introduced a new law that stated we could not export raw materials. Consequently, we built a flotation plant to extract the higher quality of leads and zinc, or the concentrates. We now sell a more premium and value-added product than we did when selling just ores. We also save a great deal of the cost. Before, we had to transport 200,000 tons of ore a month from mines to ports, and it would cost a lot. Now we just transport 2,000-3,000 tons of concentrate, which costs less and requires fewer trips. When the government enacted the mineral export legislation, we started building a smelter as well, and we are looking at other markets besides China. We are doing a great deal of testing now to determine if we can produce bullion from the concentrate with a higher grade. If all goes well in the coming two months, we will consider starting in 2018.
MINING INDONESIA
TABLE OF CONTENTS
Interview
Dr. Bambang Brodjonegoro, Minister , National Development Planning (Bappenas)
TBY talks to Dr. Bambang Brodjonegoro, Minister of National Development Planning (Bappenas), on acquiring financing for infrastructure projects and boosting private sector involvement in the country.
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Thomas Trikasih Lembong, Chairman, Investment Coordinating Board (BKPM)
Thomas Trikasih Lembong is the Chairman of BKPM. He was a former Minister of Trade of Indonesia from 2015-2016. Prior his appointment in the cabinet, he had a long professional career. He was a Co-Founder, Chief Executive Officer, Managing Partner, and Partner at Quvat Management Pte Ltd and also served as President Commissioner at PT Graha Layar Prima Tbk (BlitzMegaplex) since 2012. He was previously employed with Principia Management Group and the Equity Division of Morgan Stanley (Singapore) Pte. Ltd, among others. He received a bachelor's degree in architecture and urban design from Harvard. He also was elected Young Global Leader by the World Economic Forum in 2008.
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Tevita Lavemaau, Former Minister of Finance and National Planning , Tonga
TBY talks to Tevita Lavemaau, Former Minister of Finance and National Planning of Tonga, on the effect of climate change on the country, its work to combat inequality, and further areas of cooperation with Indonesia.
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Dr. Tito Sulistio, President Director, Indonesia Stock Exchange (IDX)
TBY talks to Dr. Tito Sulistio, President Director of Indonesia Stock Exchange (IDX), on the strong performance of the capital markets, its goals to increase the number of listed companies, and the growing importance of digital innovation.
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Amien Sunaryadi, Chairman, Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas)
TBY talks to Amien Sunaryadi, Chairman of Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), on preparing new block offerings, attracting greater investment into the sector, and pushing for exploration.
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Ronald Walla, President Director, PT Wismilak Inti Makmur
TBY talks to Ronald Walla, President Director of PT Wismilak Inti Makmur, on offering the public a more relevant value proposition, strengthening the ideology of Indonesia's founding fathers, and forging bigger profit margins.
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Teddy Tjokrosaputro, President Director, PT Rimo International Lestari (RIMO)
TBY talks to Teddy Tjokrosaputro, President Director of PT Rimo International Lestari (RIMO), on stepping back forcefully from the brink, using affordable housing as a springboard, and laying the groundwork for the country's future.
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In the House
As strong economic growth, an optimistic political outlook, and a partially successful tax amnesty to repatriate offshore wealth continue to drive up housing prices in Indonesia's major urban centers, demand for new housing and shares in developers plummeted in 2017.
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