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 slow on the back of the country's ban on mineral exports and continued mineral price weakness.

Indonesia - Mining Industry Value Forecast (2014-2019)
2014e 2015f 2016f 2017f 2018f 2019f
e/f= BMI estimate/forecast. Source= UN Data, BMI
Mining Industry Value, USDbn 79.27 66.43 63.25 67.45 75.41 55.40
Mining Industry Value, USDbn, % y-o-y -13.85 -16.20 -4.79 6.64 11.80 -26.54

Latest Developments & Structural Trends

  • 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.

  • 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 with just one local smelter owned by Inalum completed in 2014 and all other projects halted to date. This will lead to further production cuts by bauxite miners in the near term. As such, we have revised down our forecasts as we expect the majority of new smelter projects will not materialise due to both low bauxite prices and the mineral ore export ban staying in place over the coming quarters. We have revised down our average annual bauxite production growth forecast for Indonesia down from 550% to 40.0%, 58.0% to -4.0% and 20.0% to -4.0% for 2015, 2016 and 2017, respectively.

  • We have revised down our previously positive production forecast and now expect Indonesia's coal production to fall by 20.0% to 370 million tonnes in 2015, followed by subdued growth at an average clip of 1.7% per annum over 2016-2019. In January 2015, the Indonesian Ministry of Energy and Mineral Resources mentioned that the country is aiming to produce 425 tonnes of coal with 333mn tonnes earmarked for exports. 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 growth from a domestic pipeline of coal-fired power plants and continued import demand from Asia.

  • 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 that Indonesia's tin mining production will shrink in the coming years due to a clampdown on miners and restrictions on offshore mining. We forecast Indonesia's tin mine production to decrease 10.0% in 2015 followed by an average annual growth of 3.6% over 2016-2019. Tin production will be constrained in 2016 as only 3 out of 22 registered tin exporters could achieve the 'Clean and Clear' certification from the government which is a requirement in order to export tin from November 1, 2015

  • 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 shortages and poor infrastructure support in Indonesia also remain significant hurdles to the development of a downstream mineral products industry over the medium term. Given the importance of the mining sector, which accounts for around 11% of Indonesia's GDP and 16.0% of all foreign direct investment flows, the government will be carefully monitoring the situation and might adjust its policy in case growth slows down further.

BMI Industry View
7
Table: Indonesia - Mining Industry Value Forecast (2014-2019)
7
Latest Developments & Structural Trends
7
SWOT
8
Industry Forecast
10
Bauxite: Growth To Recover Gradually
10
Latest Developments
10
Table: Bauxite Production Forecast (Indonesia 2011-2019)
10
Structural Trends
10
Coal: Slow Growth In Years To Come
14
Latest developments
14
Table: Coal Production Forecast (Indonesia 2011-2019)
14
Structural Trends
14
Production Fall In 2015
17
Table: Indonesia - Select Coal Projects
17
Copper: Growth Cooling Down
21
Latest Developments
21
Table: Copper Production Forecast (Indonesia 2014-2019)
21
Structural Developments
21
Grasberg To Drive Output Growth
23
Table: Indonesia - Major Copper Projects
23
Nickel: Production Making A Recovery
25
Latest Developments
25
Table: Nickel Production Forecast (Indonesia 2011-2019)
25
Structural Trends
25
Ban Moderation Unlikely
25
Modest Price Growth
27
Table: Indonesia - Largest Nickel Projects
28
Smelters Being Built
28
Tin: Refined Export Control Will Limit Growth
30
Latest Developments
30
Table: Tin Production Forecast (Indonesia 2011-2019)
30
Structural Trends
30
Failure To Maintain Export Quota
31
Industry Risk Reward Ratings
33
Indonesia - Risk/Reward Index
33
Rewards
33
Industry Rewards
33
Country Rewards
33
Risks
34
Industry Risks
34
Country Risks
34
Table: Indonesia - Mining Industry Value & Mineral Production Forecasts
35
Asia Risk/Reward Index
35
Table: Asia - Mining Risk/Reward Index
39
Regulatory Development
40
Key Developments
40
Ban Moderation On The Horizon
40
Table: Indonesia - Export Restrictions On Select Commodities
41
The New 2009 Mining Law
41
Commodities Forecast
44
Commodities Outlook
44
Table: BMI Commodities Price Forecasts
44
Competitive Landscape
45
Key Players
45
Table: Financial Data For Key Mining Firms Listed In Indonesia
46
Company Profile
47
PT Antam
47
Table: PT Antam - Key Financial Data
49
PT Bumi Resources
50
Table: Bumi Resources - Key Financial Data
52
PT Indo Tambangraya Megah Tbk (ITMG)
53
Table: ITMG - Key Financial Data
55
PT Timah
56
Table: PT Timah - Key Financial Data
59
Global Company Strategy - Freeport-McMoRan - Q4 2015
60
Company Strategy
62
Latest Results
63
Table: Freeport McMoRan Supply Chain Analysis
64
Financial Data
64
Table: Freeport-McMoRan - Key Financial Data
64
Address Details
65
Regional Overview
66
Asia Mining: The Four Key Themes
66
Continued Domination Of Iron Ore Production
66
Indian Coal Consumption To Outperform
67
Slowing Demand From China
68
Indonesian Ban To Remain In Place
69
Global Industry Overview
71
Global Mining: 2015 Key Themes Revisited
71
Table: Key Mining Themes For 2015
71
Theme: Mining Capital Expenditure Will Continue To Decline
71
Theme: US Dollar Strength
72
Iron Ore Consolidation & Majors Share To Increase
73
Asian Investment In Africa To Continue
74
2015's Standouts
75
Methodology
77
Industry Forecast Methodology
77
Sources
78
Risk/Reward Index Methodology
79
Table: Weighting Of Indicators
80

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.