<strong>Mining</strong> IN <strong>Indonesia</strong> <strong>Indonesia</strong>: an overview Diverse opportunities in a diverse country Aerial view of project site showing tailings dams, plant site and Purnama mine. Photo courtesy of G Resources. <strong>Indonesia</strong> comprises more than 17,500 islands, home to 237.4 million people; the fourth-largest national population in the world. Its inhabitants speak 742 languages and dialects and hold 300 distinct ethnicities. They live, work and shop in ultra-modern skyscrapers and traditional street markets. <strong>Indonesia</strong>, in short, is a perplexing country: a cultural and ecological amalgamation that both confounds and delights. This diversity is no less present away from the camera clicks of tourists: under the ground <strong>Indonesia</strong>’s geological structures hold vast mineral potential. From a geological standpoint, <strong>Indonesia</strong> boasts one of the most attractive landscapes in the world: the Central Papua magmatic arc contains porphyry copper, gold and silver deposits; the Sunda Banda magmatic arc contains epithermal gold deposits; nickel, tin, copper and coal potential is huge. <strong>Indonesia</strong> is an advancing economic power. With the exception of 2009, an annual growth of more than 6% for the past five years has seen the country regain its investment grade rating from Fitch and Moody’s. Yet despite vast reserves, the mining sector is still in its infancy. For all its diversity, <strong>Indonesia</strong> ranks in the top 10 global producers for only four minerals. Compared to Australia and Brazil’s pro- duction of around 20 metals, and Canada’s production of close to 30, <strong>Indonesia</strong>’s production of a mere 10 should give some hint of the potential that awaits. Yet the regulatory framework governing exploration and extraction is not up to international standards: the Fraser Institute’s Annual Survey of <strong>Mining</strong> Companies 2011/<strong>2012</strong> ranks <strong>Indonesia</strong> amongst the top 10 nations in mineral prospectivity, yet in the bottom 10 in terms of mining friendliness. Apart from coal, mineral production has remained fairly stagnant. The 2009 <strong>Mining</strong> Act is often accused of being the main culprit behind the difficulties that the non-coal sector has been facing. Since its enactment, the number of foreign juniors in the country has shrunk considerably, causing a sharp decline in exploration spending. When compared to jurisdictions such as the Canadian province of Ontario, total exploration dollars in <strong>Indonesia</strong> are dwarflike, standing at $80 million spent in 2011 while Ontario exceeded $1 billion that year. Despite this, health in some specific segments has contributed to an unrelenting 11% annual growth in the mineral industry since 2009. Spurred on by global demand, <strong>Indonesia</strong>n coal producers have led this expansion. The Southeast Asian country has now emerged as the undisputed “King of Thermal Coal,” beating neighboring Australia for the top spot in total exports for 2010. From a mere 56 million mt/y in 2000, coal exports are expected to reach 312 million mt/y by the end of <strong>2012</strong>. Aided by its low-cost labor, as well as its close proximity to nearby emerging markets, the <strong>Indonesia</strong>n coal industry is expected to continue its rapid growth in the years to come. The further development of <strong>Indonesia</strong>’s mining sector, however, cannot rely solely on the black carbon. A mineral industry that fulfills the critical economic role the <strong>Indonesia</strong>n government intends must be as diverse as the country itself; encouraging all opportunities. What has so far stunted its growth are challenges as complex as they are numerous. Gaining a comprehensive understanding of these challenges, as well as the success the industry has achieved so far, requires the examination of the many parties that compose the sector. With this in mind, Global Business Reports, on behalf of Engineering and <strong>Mining</strong> Journal, provides an in-depth overview of the sector’s many nuances and intricacies. With insights from government officials, coal producers, and mineral explorers, this report will provide readers with an impartial analysis of the industry at large. 50 E&MJ • JULY <strong>2012</strong> www.e-mj.com
<strong>Mining</strong> IN <strong>Indonesia</strong> www.e-mj.com E&MJ • JULY <strong>2012</strong> 3
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