Indonesia Mining Report

Published 06 July 2015

  • 97 pages
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$1,295.00
Indonesia Mining Report

BMI View: We do not expect any moderation of the ban on export of unprocessed ores in 2015 as the government seeks to attract foreign direct investment and add value to its mining sector. A possible moderation on the ban on bauxite ore is still on the cards for 201 6 as GDP growth slows.

With the boom years in commodity prices behind us, we believe more miners in Indonesia will be forced to put the brakes on investment over the coming quarters. In January 2014, the government implemented the ban on unprocessed minerals, in order to stimulate smelter construction and increase mineral export value. The government has maintained its ban on ore exports given the steady pipeline of nickel smelters coming online which will help soak up mine production capacity. For bauxite, we believe a potential moderation is still on the cards as GDP growth continues to slow ( see 'Bauxite Ban Moderation Beco ming More Likely' Jun 26 2015 ) .

Peak Growth is Behind Us
Indonesia - Mining Industry Value
e/f = BMI estimate/forecast. Source: BMI Calculation, UN Data

The support of the courts in upholding the Mining Law passed in 2009 and the support of newly elected President Joko Widodo and the parliament lends further credence to our view that the ban on ore exports will stay put in the short run. The passing of government regulation 77 in October 2014 that gives foreign players higher foreign ownership for their upstream operations with domestic downstream processing capabilities also indicates that the government is sticking to their guns to encourage the development of the downstream sector.

In the longer term, moderation on the ban still remains a possibility if Indonesia's measures fail to attract enough foreign direct investment to offset the costs it incurs. According to the Indonesian Mining Association, building smelters is economically unviable for minerals such as copper, zinc and lead due to slim refining margins and the size of Indonesia's reserves. Chronic power...

BMI Industry View
7
SWOT
9
Industry Forecast
11
Bauxite: Output To Recover When Ban Is Moderated
11
Table: Bauxite Production Forecast (Indonesia 2011-2019)
14
Coal: Growing, Yet Risks Remain
15
Production Fall In 2015
18
Table: Indonesia - Select Coal Projects
18
Table: Coal Production Forecast (Indonesia 2011-2019)
22
Copper: Growth Cooling Down
23
Grasberg To Drive Output Growth
24
Table: Indonesia - Major Copper Projects
25
Nickel: Production Making A Recovery
27
Ban Moderation Unlikely
27
Modest Price Growth
28
Table: Indonesia - Largest Nickel Projects
29
Smelters Being Built
29
Table: Nickel Production Forecast (Indonesia 2011-2019)
30
Tin: Refined Export Control Will Limit Growth
31
Failure To Maintain Export Quota
31
Table: Tin Production Forecast (Indonesia 2011-2019)
33
Industry Risk Reward Ratings
34
Indonesia - Risk/Reward Index
34
Rewards
34
Industry Rewards
34
Country Rewards
34
Risks
35
Industry Risks
35
Country Risks
35
Table: Indonesia - Mining Industry Value & Mineral Production Forecasts
36
Asia Risk/Reward Index
36
Table: Asia - Mining Risk/Reward Index
40
Regulatory Development
41
Key Developments
41
Ban Moderation On The Horizon
41
Table: Indonesia - Export Restrictions On Select Commodities
42
The New 2009 Mining Law
42
Commodities Forecast
45
Commodity Strategy
45
Ferrous Metals
45
Iron Ore: Price To Remain Under Pressure In 2015-2016
45
Steel: Subdued Prices Until 2017
47
Non-Ferrous Metals
50
Copper: Subdued Outlook, Despite Recent Rally
50
Lead: Prices Weakness To Continue
52
Nickel: Subdued Prices Due To Weak Demand Growth
53
Tin: Supply Deficits To Underpin Rally In Tin Prices
54
Zinc: Positive Multi-Year Outlook, But Increasing Risks In Months Ahead
55
Table: Select Commodities - Performance & BMI Forecasts
57
Competitive Landscape
58
Key Players
58
Table: Financial Data For Key Mining Firms Listed In Indonesia
59
Company Profile
60
PT Antam
60
Table: PT Antam - Key Financial Data
62
PT Bumi Resources
63
Table: Bumi Resources - Key Financial Data
65
PT Indo Tambangraya Megah Tbk (ITMG)
66
Table: ITMG - Key Financial Data
68
PT Timah
69
Table: PT Timah - Key Financial Data
72
Global Company Strategy - Freeport-McMoRan - Q2 2015
73
Company Strategy
75
Latest Results
76
Table: Freeport McMoRan Supply Chain Analysis
76
Financial Data
77
Table: Freeport-McMoRan - Key Financial Data
77
Address Details
77
Regional Overview
78
Continued Domination Of Iron Ore Production
78
Indian Coal Consumption To Outperform
79
Table: Less Reliance On Coal
81
Indonesian Ban To Continue
81
Global Industry Overview
83
Global Overview
83
1
84
2
86
3
87
4
89
5
91
Methodology
93
Industry Forecast Methodology
93
Sources
94
Risk/Reward Index Methodology
95
Table: Weighting Of Indicators
96

The Indonesia Mining Report has been researched at source and features Business Monitor International (BMI)'s mining and commodity forecasts for metals, minerals and gems, covering all major indicators including reserves, production, exports and values. The report also analyses trends and prospects, national and multinational companies and changes in the regulatory environment.

BMI's Indonesia Mining Report provides industry strategists, service companies, company analysts and consultants, government departments, trade associations and regulatory bodies with BMI's independent forecasts and competitive intelligence on the mining industry in Indonesia.

Key Benefits

  • Use BMI's independent industry forecasts on Indonesia to test other views - a key input for successful budgeting and planning in this mining market.
  • Target business opportunities and risks in Indonesia's mining sector through our reviews of latest mining industry trends, regulatory changes and major deals, projects and investments in Indonesia.
  • Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity), Key Projects Tables and Competitive Landscape Tables.

Coverage

BMI Industry View

Summary of BMI’s key forecasts and industry analysis, covering mining reserves, supply, demand and prices, plus analysis of landmark company developments and key changes in the regulatory environment.

Industry SWOT analysis

Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the mining sector and within the broader political, economic and business environment.

BMI Industry Forecasts

Historic data series (2009-2013) and forecasts to end-2019 for key industry and economic indicators, supported by explicit assumptions, plus analysis of key risks to the main forecasts. Indicators include:

  • Mining industry: Industry size (USDmn), real growth (%), % of GDP, employment (‘000), workforce as % of total workforce, average wage (USD).
  • Output: Production volumes (‘000 tonnes, carats etc.) for all major metals, minerals, ores and gems mined in each state, including bauxite, copper, gold, coal, lead, silver, tin, titanium, uranium, zinc etc.
  • Exports: Value of exports (USDmn) for all major metals, minerals, ores and gems mined in each state.
  • Commodity markets: Global demand, supply, stocks and benchmark prices (USD) for aluminium, copper, lead, nickel, tin, zinc, gold and steel.

BMI’s Mining Risk Reward Index

BMI’s Risk Reward Indices provide investors (mining companies and support service providers) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.

Competitive Landscape Tables & Analysis

Comparative company analyses and tables detailing USD sales, % share of total sales, number of employees, year established, market cap/NAV, ownership structure, production and % market share.

Key Projects

Details and analysis of all current and planned developments (new ventures, capacity expansion and other investments) across the sector broken down by metal/ore.

Company Profiles*

Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.

Sources

The Mining reports are based on an extensive network of primary sources, such as multilateral organisations (UN, WB, IMF), national chambers of commerce and industry, national statistical offices, government ministries and central banks, and multinational companies.

*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.

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