The Indonesian mining sector has long been the center and main pillar of Indonesia’s economic expansion — a significant contributor to the country’s GDP through lucrative exports. Mining also opens up many job opportunities in Indonesia with its diverse landscape.
Despite the decline in recent years due to reduced demand from China and regulatory changes to promote the downstream industry, Indonesia’s vast reserves of coal and minerals are one of the most attractive assets domestically and globally.
- According to the Indonesian government, domestic coal demand is targeted to reach 114.51 million tonnes in 2018, an increase of 6% from the predicted demand in 2017.
- Indonesia ranks fourth among the world’s top 10 coal and mining producers.
- The government is also focused on developing the rare earth element industry.
- The prediction states that Indonesia’s coal exports will reach 371 million tonnes in 2018 – a 7 percent increase from 2017.
- Indonesian Mining Law plays a vital role in unlocking the full potential of the mining industry.
It is not surprising that Indonesia continues to be a major player in the international mining industry. Production of minerals such as coal, copper, gold, tin, bauxite, and nickel is still very active due to the abundant resources in Indonesia. Besides, Indonesia also continues to be one of the world’s largest exporters of thermal coal – ranking 4th as the world’s top coal producer, behind only China, the United States, and India.
International mining companies are well aware of Indonesia’s reputation in terms of mining potential and opportunities, especially in the coal sector. To make full use of these resources and encourage more investment, the Indonesian government is actively correcting weaknesses in regulations, to reduce investment risks.
Big Coal Miners in Indonesia
Indonesia is currently in 13th place for global coal reserves, containing about 0.6 percent of total global coal reserves, according to the BP Statistical Review of World Energy. Indonesia’s coal mining industry is concentrated in Sumatra and Kalimantan. Coal mining players listed on the Indonesia Stock Exchange will increase the volume of coal output in 2018 due to surging global demand and coal prices since mid-2016, due to bad weather in Indonesia and government policies.
Some of the biggest mining companies are Bumi Resources (biggest), Adaro Energy (second largest), Arutmin, Delta Dunia Makmur, Indika Energy, Berau Coal, Kaltim Prima Coal, and Kideco Jaya Agung. Only in 2018, it is estimated that Bumi Resources will produce 90-96 million tons of coal; Adaro Energy targets to produce 54-56 million tonnes; Delta Dunia Makmur wants to produce 50 million tons, and Indika Energy wants to produce 34 million tons of coal.
Mining Law in Indonesia
According to data from the National Development and Reform Commission (NDRC), coal prices remain volatile and highly dependent on the Chinese government’s policy of reducing its mining sites in Indonesia. Due to the limited supply on the international market, the price of coal will increase.
The Indonesian Mining Law and supporting regulations will be very important, establishing the regulatory certainty needed for investors to be able to fulfill the potential of their mining industry and attract more foreign investment. Furthermore, this helps strengthen Indonesia’s global position as a key player in the mining sector.