Indonesia’s mining sector has long been the powerhouse and key pillar of Indonesian economic expansion—a significant contributor to the nation’s GDP through profitable export.
It also creates great employment opportunities in the country with a highly diverse landscape. Despite the decline in the recent years due to reduced demand from China and regulatory changes to promote downstream industry, Indonesia’s substantial mineral and coal reserves remain one of the most attractive assets domestically and globally.
- According to the Indonesian government, Indonesia’s domestic coal demand is set to reach 114.51 million tons in 2018, increase 6 per cent from the forecast demand in 2017.
- Indonesia ranks 4th among the world’s top 10 coal and mining producers.
- The government is also focusing on developing the rare earth elements industry.
- It is forecast that Indonesia’s coal export is expected to hit 371 million tonnes in 2018—7 per cent increase from 2017.
- The Indonesian Mining Law plays a vital role in tapping the full potential of the mining industry.
It’s not surprising that Indonesia continues to be a compelling player in the international mining industry. Production of minerals such as coal, copper, gold, tin, bauxite, and nickel are still significantly active due to the resource abundance in Indonesia. Besides, Indonesia also continues to be one of the world’s largest exporters of thermal coal – ranked 4th as the world’s top coal producers, only behind China, the United States, and India.
International mining firms rank Indonesia highly without fails, in terms of its mining potential and opportunities, particularly on the coal sector. In order to fully utilise these resources and encourage more investments, the Indonesian government is actively correcting regulatory shortcomings, in favour of reducing investments risks.
Large Coal Miners in Indonesia
Indonesia is currently ranked 13th in the global coal reserves, containing about 0.6 per cent of total proven global coal reserves, according to the BP Statistical Review of World Energy. The country concentrates on the mining industry in Sumatra and Kalimantan. The listed coal mining players on the Indonesia Stock Exchange set to increase their coal output volumes in 2018 due to the soaring global demand and rising coal price since mid-2016, attributable to Indonesia’s bad weather and government policies.
Some of the biggest coal mining companies are Bumi Resources (the largest), Adaro Energy (the second largest), Arutmin, Delta Dunia Makmur, Indika Energy, Berau Coal, Kaltim Prima Coal, and Kideco Jaya Agung. In 2018 alone, Bumi Resources is estimated to produce 90-96 million tonnes of coal; Adaro Energy targets to yield 54-56 million tonnes; Delta Dunia Makmur aims to produce 50 million tonnes, and Indika Energy expects to have a coal output of up to 34 million tonnes.
The Mining Law in Indonesia
According to data from the National Development and Reform Commission (NDRC), the coal price remains highly fluctuating and depends largely on the Chinese government’s policies with its reduction of mining spots in Indonesia. Due to limited supply on the international market, coal price is anticipated to increase.
The Indonesian Mining Law and its supporting regulations are thereby crucial, serving as a necessary regulatory certainty for investors, in order to fully realise its mining industry potential and attract more foreign investments. Subsequently, this helps strengthen Indonesia’s global spot as the key player in the mining sector.
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