Indonesia Mining Report

Published 26 March 2015

  • 114 pages
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$1,295.00
Indonesia Mining Report

BMI View: The export ban on raw minerals will significantly impact production growth and hamper investment for Indonesia's mining industry. We do not expect any moderation of the ban 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 2016.

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. The export ban on raw minerals will significantly impact financial growth in Indonesia's mining sector. In January 2014, the government implemented the ban on unprocessed minerals, in order to stimulate smelter construction and increase mineral export value. Till this date, the government has maintained its strict ban on bauxite and nickel ore. For nickel, it is unlikely that the government will moderate 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 of the ban on bauxite is still on the cards with potential announcements being made in 2016.

Peak Growth is Behind Us
Indonesia - Mining Industry Value

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...

Table of Contents

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)
15
Coal: Growing, Yet Risks Remain
16
Production Fall In 2015
19
Table: Indonesia - Select Coal Projects
20
Table: Coal Production Forecast (Indonesia 2011-2019)
23
Copper: Growth Cooling Down
24
Grasberg To Drive Output Growth
27
Table: Indonesia - Major Copper Projects
28
Nickel: Production Making A Recovery
30
Ban Moderation Unlikely
30
Modest Price Growth
31
Table: Indonesia - Largest Nickel Projects
32
Smelters Being Built
32
Table: Nickel Production Forecast (Indonesia 2011-2019)
34
Tin: Refined Export Control Will Limit Growth
35
Export Restrictions On Shaky Ground
36
Table: Tin Production Forecast (Indonesia 2011-2019)
38
Industry Risk Reward Ratings
39
Indonesia - Risk/Reward Index
39
Rewards
39
Industry Rewards
39
Country Rewards
39
Risks
40
Industry Risks
40
Country Risks
40
Table: Indonesia - Mining Industry Value & Mineral Production Forecasts
41
Asia Risk Reward Index
41
Australia Stays On Top While India & Myanmar Gain
41
Shifting Scores Reflect Changing Sector Dynamics
42
Table: Asia - Mining Risk/Reward Index
43
Regulatory Development
44
Key Developments
44
Ban Moderation On The Horizon
44
Table: Indonesia - Export Restrictions On Select Commodities
45
The New 2009 Mining Law
45
Table: Asia - Regulatory Outlook
47
Commodities Forecast
49
Table: BMI Thermal Coal Price Forecast
49
Table: Global - Select Coal Mining Projects
54
Table: Select Thermal Coal Contracts (USD/tonne)
56
Commodity Strategy
56
Ferrous Metals
56
Iron Ore: Further Price Declines
56
Steel: Weak Iron Ore Prices Will Drag On Steel Prices
58
Non-Ferrous Metals
61
Aluminium: Supply Growth To Mute Price Gains
61
Copper: Only Modest Multi-Year Recovery
62
Lead: Prices Weakness To Subdue Production Growth
63
Nickel: Short-Term Weakness To Abate Over Coming Quarters
65
Tin: Export Curbs Will Eventually Bite
66
Zinc: Outperformance Set For 2015
68
Table: Select Commodities - Performance & BMI Forecasts
69
Competitive Landscape
71
Key Players
71
Table: Financial Data For Key Mining Firms Listed In Indonesia
72
Company Profile
73
PT Antam
73
Table: PT Antam - Key Financial Data
76
PT Bumi Resources
77
Table: Bumi Resources - Key Financial Data
79
PT Indo Tambangraya Megah Tbk (ITMG)
81
Table: ITMG - Key Financial Data
83
PT Timah
85
Table: PT Timah - Key Financial Data
87
Global Company Strategy - Freeport-McMoRan - Q2 2015
89
Company Strategy
91
Latest Results
92
Table: Freeport McMoRan Supply Chain Analysis
92
Financial Data
93
Table: Freeport-McMoRan - Key Financial Data
93
Table: Freeport-McMoRan - Key Financial Data
93
Address Details
93
Regional Overview
95
Continued Domination Of Iron Ore Production
95
Indian Coal Consumption To Outperform
96
China & India To Lead In Outbound Investment
97
Indonesian Ban To Continue
99
Global Industry Overview
100
Global Overview
100
2
103
3
104
5
108
Methodology
110
Industry Forecast Methodology
110
Sources
111
Risk/Reward Index Methodology
112
Table: Weighting Of Indicators
113

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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Testimonials

'An essential, multi-faceted research tool. BMI’s thorough understanding of the major market players enables an informed – and informative – review of the sector’s actual performance, together with useful insights into current industry issues, which are topped-off with detailed and invaluable forecasts of industry and macroeconomic trends.’

Senior Research Analyst, ABC International Bank plc