Indonesia Mining Report

Providing expert analysis, independent forecasts and competitive intelligence on the mining.

Report includes: BMI Industry View, Industry SWOT Analysis, Industry Forecasts, BMI's Petrochemicals Risk Reward Index, Economic Forecasts, Company Profiles and Global, Regional and Country Industry Overviews.

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Indonesia Mining Report
Product Price
$1,295.00

BMI View: Indonesia's mineral production growth will remain slow on the back of heightened environmental protection, slowdown in the Chinese economy and continued mineral price weakness. The impending ban moderation on the export of mineral ores will provide some respite to production, especially in the case of bauxite.

Indonesia - Mining Industry Value Forecast (2012-2020)
2012 2013 2014e 2015e 2016f 2017f 2018f 2019f 2020f
e/f= BMI estimate/forecast. Source: BMI Calculation/UN Data
Mining Industry Value, USDbn 103.39 91.95 78.20 60.55 53.81 54.21 59.92 64.44 69.03
Mining Industry Value, USDbn, % y-o-y 3.15 -11.06 -14.95 -22.58 -11.12 0.73 10.55 7.54 7.12

Latest Developments & Structural Trends

  • We expect the Indonesian government will push ahead with its February 2016 proposal to revise the country's mineral ore export ban by September 2016 as expected investment in the downstream sector has not materialised. The bauxite sector will benefit most from the relaxation of the ban, as the sector registered poor smelter construction and the greatest loss in revenues as a result of the ban. We expect our current production forecasts to face upside risks due to the impending ban moderation.

  • We forecast bauxite production growth in Indonesia to register an annual average of 148.2% during 2016-2020, mainly because of acceleration in production in 2016 of 600% due to China Hongqiao Group Limited's smelter facility coming online. Hongqiao will initially produce one million tonnes per annum of aluminium, doubling capacity by 2017. One tonne of aluminium requires approximately five tonnes of bauxite to produce. Contrary to numerous smelter project proposals in 2014 and our past expectations on high smelter investment from China, smelter investment for bauxite has been stagnant as a result of low prices and lack of funding. In March 2016 Hongqiao started trial runs in its new alumina smelter in Indonesia, adding to the only other smelter in the country, PT Indonesia Chemical Alumina, a subsidiary of diversified local miner PT Antam.

  • We expect Indonesia's coal production to fall by 15.0% to 314 million tonnes (mnt) in 2016, followed by subdued growth henceforth to 2020, registering an average annual growth of 3.0% per annum during 2016-2020. Over the long term, despite the one time fall in domestic production due to the crackdown on illegal mining in 2015, we believe output will be supported by strong demand from a domestic pipeline of coal-fired power plants and continued import demand from Asia. Emerging economies including China and India will continue to rely on coal for power generation over the next decade. We expect domestic shortfalls in these countries to increase dependency on coal imports.

  • We forecast Indonesia's copper mine production to grow at a steady pace, registering annual average growth of 10.7% during 2016-2020, compared to a decline of -17.8 during 2011-2015. We expect copper production to grow gradually in 2016 due to the resumption of copper concentrate exports from the major miners. In July 2014, the Indonesian Finance Ministry revised its rulings on taxation, with tax on copper concentrate exports being reduced from 20.0-25.0% to 7.5%. This export tax will decline to 5.0% when the progress on smelter development by mining firms exceeds 7.5%, and finally to 0.0% when smelter progress exceeds 30%. Currently, an outright ban on copper concentrate will come into place in 2017.

  • We forecast Indonesia's nickel ore production to grow by 15.0% in 2016 and by an annual average of 10.6% over the subsequent five years to 296thousand tonnes (kt). This is because of a few nickel pig iron smelters coming online, including Tsingshan Sulawesi's nickel pig iron phase 2 project. Although numerous smelter projects had been planned since 2014, the lack of funding to build them and low metal prices have resulted in a slow materialisation of smelter construction. The dwindling of Chinese high grade ore stocks and the consolidation of China's domestic nickel industry coupled with the high demand for nickel will provide support to nickel prices. Indonesia is set to take its place as one of the top exporters of nickel pig iron to China over the coming years.

  • We forecast that Indonesia's tin mining production will slow in the coming years due to a clampdown on miners and restrictions on offshore mining. We forecast Indonesia's tin mine production to register an annual average growth of 1.9% during 2016-2020, compared to 17.0% during 2011-2015. Tin production will be constrained in 2016 as registered tin exporters struggle to obtain the 'Clean and Clear' certification from the government which is a requirement in order to export tin from November 1, 2015. In February 2016, major private tin miner and smelter, PT Refined Bangka Tin announced plans to end all its tin operations after failing to meet 'environmentally friendly' requirements. In the same month the Indonesian government started further auditing of 33 tin smelters in Bangka Belitung to assess whether to allow their tin exports. Since January 2016, the country's largest tin producer, PT Timah Tbk, stopped production in Kelabat Bay after orders from the local governor in Bangka to halt offshore mining following complaints from fishermen and NGOs about environmental damage caused by dredging.

  • Without the relaxation of the ban moderation, the mining industry will not recover and continue to contribute to the country's economic slowdown. In 2015, Indonesian mining industry value shrank by 19.8% and we forecast a further 8.4% decline in 2016. Without ban relaxation we forecast the mining sector's contribution to GDP to decline to 5% by 2020, down from 11% in 2013 before the ban. Additionally, Indonesia's real export growth dipped to 4.6% in 2015 compared to 22.4% in 2013 before the ban. These poor macroeconomic indicators will ensure the Indonesian government moderates the ban on mineral ore exports as it has planned to do by September 2016 in order to improve economic growth.

BMI Industry View
7
Table: Indonesia - Mining Industry Value Forecast (2014-2019)
7
Latest Developments & Structural Trends
7
SWOT
9
Industry Forecast
11
Bauxite: Growth To Recover Gradually
11
Latest Developments
11
Table: Bauxite Production Forecast (Indonesia 2014-2019)
11
Structural Trends
12
Coal: Slow Growth In Years To Come
16
Latest developments
16
Table: Coal Production Forecast (Indonesia 2011-2019)
16
Structural Trends
16
Production Fall In 2015
19
Table: Indonesia - Select Coal Projects
19
Copper: Growth Cooling Down
23
Latest Developments
23
Table: Copper Production Forecast (Indonesia 2011-2019)
23
Structural Developments
23
Grasberg To Drive Output Growth
25
Table: Indonesia - Major Copper Projects
25
Nickel: Production Making A Recovery
27
Latest Developments
27
Table: Nickel Production Forecast (Indonesia 2010-2020)
27
Structural Trends
27
Ban Moderation Unlikely
27
Modest Price Growth
29
Table: Indonesia - Largest Nickel Projects
29
Smelters Being Built
29
Tin: Refined Export Control Will Limit Growth
31
Latest Developments
31
Table: Tin Production Forecast (Indonesia 2011-2019)
31
Structural Trends
31
Failure To Maintain Export Quota
32
Industry Risk Reward Ratings
35
Indonesia - Risk/Reward Index
35
Rewards
35
Industry Rewards
35
Country Rewards
35
Risks
35
Industry Risks
35
Country Risks
36
Asia - Risk/Reward Index
36
Table: Asia - Mining Risk/Reward Index
38
Regulatory Development
39
Key Developments
39
Ban Moderation On The Horizon
39
Table: Indonesia - Export Restrictions On Select Commodities
40
The 2009 Mining Law
40
Trade & Investment Risk Analysis
42
Commodities Forecast
45
Commodities Outlook
45
Table: BMI Commodities Price Forecasts
45
Competitive Landscape
46
Key Players
46
Table: Financial Data For Key Mining Firms Listed In Indonesia
47
Company Profile
49
PT Antam
49
Table: PT Antam - Key Financial Data
51
PT Bumi Resources
53
Table: Bumi Resources - Key Financial Data
55
PT Indo Tambangraya Megah Tbk (ITMG)
56
Table: ITMG - Key Financial Data
57
PT Timah
58
Table: PT Timah - Key Financial Data
60
Global Company Strategy - Freeport-McMoRan - Q1 2016
61
Company Strategy
63
Latest Results
64
Financial Data
65
Table: Freeport-McMoRan - Key Financial Data
65
Address Details
65
Regional Overview
66
Asia Mining: The Four Key Themes
66
Key Themes
66
Australia To Dominate Iron Ore Sector
66
Indian Coal Consumption To Remain Solid
67
Weak Chinese Demand To Keep Prices Low
68
Indonesian Ban Moderation Increasingly Likely
69
Methodology
71
Industry Forecast Methodology
71
Sources
72
Risk/Reward Index Methodology
73
Table: Weighting Of Indicators
74

The Indonesia Mining Report has been researched at source and features BMI Research'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.