Mining Industry Indonesia: Future Outlook & Potential

6 Key Insights on Indonesia’s Mining Industry

  • InCorp Editorial Team
  • 5 March 2025
  • 6 minutes reading time

The mining industry in Indonesia has significantly contributed to the country’s economic growth, thanks to its vast reserves of coal, nickel, bauxite, and tin. As one of the world’s largest mineral producers, Indonesia has attracted considerable foreign investment, especially in sustainable mining practices. 

However, the industry faces environmental and social impacts, regulatory complexities, and the global transition to cleaner energy. This article explores the current state of Indonesia’s mining sector, focusing on coal mining, nickel processing, and government regulations. 

Why is Mining a Good Investment? 

The mining industry in Indonesia is a cornerstone of the country’s economy, contributing approximately 5% of the GDP and supporting millions of jobs. Investors are increasingly drawn to coal mining in Indonesia and its booming nickel and bauxite mining sectors. 

Why Should Investors Consider Mining in Indonesia? 

  • Largest Nickel Reserves: Indonesia holds the world’s largest nickel deposits, making it a crucial player in the electric vehicle (EV) battery supply chain. 
  • Dominance in Coal Production: The coal mining industry in Indonesia remains one of the largest in the world, with the country exporting more than 450 million tons annually. 
  • Government Incentives: The International Trade Administration highlights Indonesia’s policies favoring local processing industries, such as its bans on raw mineral exports. 
  • Demand for Sustainable Practices: New policies promote sustainable mining practices in Indonesia, encouraging investments in environmentally responsible operations. 
  • Strategic Global Trade Position: Indonesia’s proximity to China, India, and other major markets ensures strong demand for coal and metal exports. 

What Makes Indonesia’s Geological Condition Ideal for Mining? 

Indonesia’s geological wealth makes it one of the world’s top mining nations, with vast reserves of nickel, gold, coal, and copper fuels in global industries. 

  • Nickel: The world’s largest producer, with 75 million tons in reserves, Indonesia is at the forefront of the EV battery revolution. Demand is expected to surge 250% by 2025. 
  • Gold: With 2,100 tons of reserves, Indonesia ranks among the top seven gold-producing nations, making it a reliable investment in times of economic uncertainty. 
  • Coal: Despite shifts to renewables, coal mining in Indonesia remains vital. It boasts the sixth-largest global reserves and supplies key energy markets. 
  • Copper: Home to the Grasberg Mine, Indonesia is a major global supplier of copper. Copper demand is rising due to electronics and green energy infrastructure. 

Beyond these, Indonesia holds significant tin, bauxite, manganese, lithium, and cobalt reserves, creating diverse investment opportunities in mining and mineral processing. 

READ MORE:

Mining Industry Landscape in Indonesia 

The mining industry in Indonesia plays an essential role in the global supply chain, especially in nickel, coal, copper, and gold production. Here are key industry insights based on 2024 data from S&P Global Market Intelligence. 

Nickel Production & Reserves 

In 2023, Indonesia produced 54% of the world’s mined nickel, totaling about 2.02 million metric tons (MMt), and holds 80 million metric tons of reserves. By 2028, it is expected to provide 60% of the global nickel supply, with production rising to approximately 2.9 MMt. Indonesia’s competitive cost structure keeps its all-in-sustaining cost (AISC) below the average nickel price. 

Gold, Copper, and Cobalt Production 

Indonesia is one of the top 10 gold-producing countries, with an annual production of 3.2 million ounces (Moz). It ranks fifth in global copper production, contributing 0.9 million metric tons (MMT) annually. Additionally, Indonesia is the second-largest cobalt producer in the world, with an output of 22,500 metric tons (000t). 

Mining Reserves & Exploration 

Indonesia’s gold reserves are estimated to last 20 years, comparable to Canada’s and Russia’s. Copper reserves are projected at 25 years, ranking Indonesia among the world’s top holders. Nickel reserves are estimated at 11 years, although ongoing exploration and new projects may extend this. In 2023, six new non-ferrous commodities were explored, showcasing the country’s commitment to resource development. 

The Future of Indonesia’s Mining Industry 

Indonesia aims to boost its mining sector to achieve 8% economic growth, focusing on downstream processing to add value before export. According to Minister of Energy and Mineral Resources, Bahlil Lahadalia: 

  • Indonesia needs $618 billion for mining and downstream industries by 2040. 
  • 91% of investments fall under the Ministry of Energy and Mineral Resources. 
  • Nickel reserves make up 40-45% of the world’s total, attracting EV battery investors. 
  • President Prabowo Subianto is inviting foreign investors, especially from the Pacific region. 
  • A focus on mineral processing will drive economic growth and job creation. 

Opportunities in Indonesia’s Mining Industry for Investors

Mining Industry Indonesia: Future Outlook & Potential

Indonesia’s mining sector offers exciting investment opportunities across various areas. Here are some key avenues for investors to explore: 

  • Direct Investment in Mining Projects: Partner with established or emerging mining companies to explore, develop, and extract valuable minerals like nickel, gold, and copper. 
  • Mining Technology & Services: Invest in automation, safety innovations, and environmental sustainability to enhance efficiency and compliance in the mining industry. 
  • Downstream Processing & Refining: Support local smelting and processing industries, ensure minerals are refined within Indonesia before export, and align with government policies. 
  • Renewable Energy for Mining Operations: Collaborate with mining companies to integrate renewable energy solutions, reducing environmental impact and attracting ESG-conscious investors. 

Challenges and Considerations for Mining Investment 

Investing in Indonesia’s mining sector presents significant opportunities, but foreign investors should be aware of key challenges: 

Local Presence Requirement 

Indonesia mandates that foreign companies establish a local presence through representatives, distributorships, or agencies. Working with local partners with vendor registration is essential, as state-owned enterprises do not issue vendor numbers to foreign entities. 

Foreign Divestment Regulations 

The Indonesian government aims to increase state ownership in mining through foreign divestment policies. Since 2021, divestment rules have been relaxed, allowing foreign investors more time to reduce their ownership gradually. Companies must start divesting shares in the 20th year of production instead of the fifth year as previously required. 

While these regulatory hurdles exist, proper planning and local partnerships can help investors navigate the market and maximize long-term opportunities in Indonesia’s growing mining sector. 

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Capitalize on Indonesia’s Mining Market with InCorp 

Indonesia’s mining industry is essential for economic growth. It offers nickel, gold, copper, and coal opportunities. With strong government support and rich mineral reserves, it attracts global investments. 

However, investors must navigate regulatory requirements, secure local partnerships, and comply with foreign divestment policies. Establishing the proper business setup and legal framework is crucial. InCorp Indonesia (an Ascentium Company) provides essential services to support your mining investment in Indonesia. 

  • Investor KITAS: A necessary permit for foreign investors to operate in Indonesia legally.  
  • Company Registration: With expert assistance, you can easily set up your mining business in Indonesia. 
  • ESG Advisory: Ensure your mining project aligns with Indonesia’s environmental, social, and governance (ESG) regulations. 

Tap into Indonesia’s thriving mining industry by filling out the form below. 

Daris Salam

COO Indonesia at InCorp Indonesia

With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships.

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Frequent Asked Questions

As an investor, you are required to have a minimum investment of IDR 1 billion in invested shares to be eligible for an investor KITAS.

An Index 313 Investor KITAS will allow its holder to stay in Indonesia for a year, while an Index 314 Investor KITAS allows for a 2 year stay.

There are three things business owners need to consider before setting up a business in Indonesia: the type of business entity, capital requirements, and regulations.

Indonesian regulations separate local companies from foreign companies. Generally, foreign-owned companies (PT PMA) have more limitations than their local counterparts (Local PT). However, to pursue more foreign direct investment in the country, the government has taken several bold initiatives to increase the ease of doing business and provide numerous attractive incentives for foreign investors.