Indonesia Mining Report Q2 2009
Business Monitor International, May 2009, Pages: 60
Investment Expected To Slump In 2009
Investment in Indonesia’s mining sector could drop below US$1bn in 2009. With global commodity prices falling, many major mining companies have shelved investment plans, which could impact on the sector. At the same time, companies are also awaiting details of a new mining bill introduced to the
country late last year. In 2008, mining investment in Indonesia was US$1.6bn, up from US$1.2bn in 2007, according to data from the energy and mines ministry.
New Mining Laws Introduced
In December 2008, a new mining law passed through parliament. The legislation has been keenly anticipated by investors, as legal uncertainties – particularly concerning whether local or central government has jurisdiction over certain mining areas – have plagued the mining sector in recent years.
Under the new laws, there will be an over-arching permit system for all foreign and domestic mining in the country. Previously, there were two separate agreements: one for foreign miners (the Contract of Works – CoW), and one for domestic operators (Kuasa Pertambangan – KP).
However, foreign investors liked the CoW because it gave them good protection, despite the myriad of legal changes since the Suharto regime fell in 1998. Therefore, they may be cautious and wait to see how the new system pans out before they start committing large-scale resources in the mining sector. Also, some investors are concerned about a new requirement that all mined minerals be processed and smelted in Indonesia, rather than exported in raw form.
Industry Forecast
The proposed mining law is not likely to bring about any revolutionary change in the industry’s investment climate, despite the switch to a mining permit system, reminiscent of Australia. There may, however, be a short-term drop in investment as companies wait for the new laws to bed in. Despite the problems in the global commodities market, BMI still forecasts robust growth in Indonesia’s mining sector, which is testament to the sheer scale of resources that the country has got.
Global Overview
On page 8 of this report, BMI examines the phenomenon of increased Chinese activity in the global mining sector, and what this means for the industry moving forward.
Executive Summary
Indonesia Political SWOT
Indonesia Economic SWOT
Indonesia Business Environment SWOT
Special Focus: Outlook For Global Mining
Table: Biggest Chinese Acquisitions In Australia Since 2005
Table: Global Mining – Top Five Companies By Market Capitalisation (US$mn)
Industry Trends And Developments
Market Overview
Table: Mines In Indonesia
Table: Global Mining – Key Players’ Future Investment Plans (selected projects)
Latest Developments
Regulatory Structure And Developments
Project And Property Update
Coal
Tin
Copper, Gold And Silver
Copper, Gold And Silver: Latest Developments
Nickel
Diamonds
Bauxite And Alumina
Mining Business Environment
Regional Overview – Asia Pacific
Table: Regional Mining Business Environment Ratings
Indonesia – Business Environment Ranking
Limits Of Potential Returns
Risks To Realisation Of Returns
Legal Framework
Table: BMI’s Legal Framework Ratings
Labour Force
Table: Labour Force Quality
Foreign Investment Policy
Table: Asia’s FDI Inflows, 2005-2006
Table: Indonesia’s FDI Inflows, 2001-2006
Political Environment
Industry Forecast Scenario
Metals Price Outlook
Table: Stock Levels At London Metals Exchange Warehouses (tonnes)
Global Industry Overview
Regional Analysis
Indonesia – Mining Industry Forecast
Table: Indonesia’s Mining Industry , 2006-2013
Competitive Landscape
Table: Indonesia Mining – Key Players
Company Monitor
BHP Billiton
Bumi Resources
PT Antam Tbk
Rio Tinto
Appendices
Appendix A: Global Assumptions
Global
Table: Global Assumptions, 2007-2013
Economic Activity
Table: Global And Regional Real GDP Growth, 2006-2012 (% change y-o-y)
Table: Developed States’ Real GDP Growth, 2008-2010
Table: Emerging Markets’ Real GDP Growth, 2008-2010
Monetary Policy
Table: Developed Market Exchange Rates, 2006-2010 (average)
Table: Emerging Market Exchange Rates, 2006-2010 (average)
Commodities
Appendix B: Business Environment Ratings Methodology
Ratings Overview
Table: Mining Business Environment Indicators
Table: Weighting Of Components
- BHP Billiton
- Bumi Resources
- PT Antam Tbk
- Rio Tinto
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