Indonesia Mining 2012 - GBR

Mining IN Indonesia
earnings base and insulate itself from the
downturns in any one location. The ongoing
development of strategic infrastructure
across Asia is one of Leighton’s foremost
priorities. Asia is part of the new area of
growth and Indonesia is one of the countries
which are driving growth in South East
Asia. We believe we are in the right place,
at the right time with the right people and
skills. Our construction and mining skills
serve Asia’s needs and lift people’s standard
of living,” said Colling.
Foreign companies who would be directly
affected by PerMen 28, in a way that
PT companies are not, do not yet appear to
be too concerned either. “As a company we
do not foresee any issues arising from this
implementing regulation of the 2009 Mining
Act; our business is growing in Indonesia,
and a foreign sister company was recently
awarded a $500 million mining contract.
There has been commentary on nationalistic
issues but in general Indonesia is arguably
stepping closer to an open market seeking
foreign investment,” said Roy Olsen, president
director, PT Thiess Indonesia.
Explosives
With a vibrant mining industry comes strong
demand for explosives, as shown by the
success of MNK and Orica, both of which
plan to build factories in Indonesia. “We
have more than quadrupled production;
from 30,000 mt/y we can now produce
150,000 mt/y. This was a major milestone.
Another major milestone was our movement
into contracts and securing long-term contracts
with producers. A large part of our
growth and success has been the construction
of the new factory, which cost approximately
$70 million. If growth continues, as
it would appear to be doing, I think that in
two to three years there will be enough need
in the market for us to construct a new factory,”
said Dharma Djojonegoro, president
director, Ancora Indonesia Resources, of
which MNK is a subsidiary.
As ammonium nitrate is the primary
feedstock for explosives, Orica’s long-term
business plan must be to ensure the company’s
supply, with the logical step of owning
their own ammonium nitrate plant. “We are
currently commissioning a 300,000 mt/y
ammonium nitrate plant with our joint venture
partners, Armindo Prima, in Bontang,
and production is imminent; the production
represents 50% of the projected domestic
consumption for 2013. Prior to the commissioning
of the new plant our market
share of the ammonium nitrate market was
50%; our services revenue is increasing at
a higher rate in percentage terms than our
base ammonium nitrate market. There are
two key sectors for ammonium nitrate: the
metals market where the demand has been
static; and the coal sector which has been
the primary growth engine for ammonium
nitrate. The joint venture with a domestic
partner for such a significant investment
was considered necessary and kept Orica
Mining in line with the Indonesia law,” said
Greg Patching, president director, Orica
Mining Services.
Orica and MNK are strong competitors,
with Orica Mining Services producing
300,000 mt /y compared to the 120,000
mt/y of MNK, according to Patching. The
new factories could prove to be a gamechanger
for both companies. “Orica is building
a 300,000 mt/y plant in Indonesia and
they will be competing. However, the market
is more than big enough for the two of
us, and the total market capacity is about
450,000 mt/y,” said Djojonegoro.
Shipping
A fundamental component in any successful
coal mining operation, especially in Indonesia,
is logistics. MBSS is the only integrated
coal logistics and transportation services
provider, able to cater to on-shore activities
such as stockpiling, coal-handling, coal
barging, and trans-shipment, and one of the
80 E&MJ • JULY 2012 www.e-mj.com