2009 Minerals Yearbook INDONESIA U.S. Department of the Interior September 2011 U.S. Geological Survey THE MINERAL INDUSTRY OF INDONESIA By Chin S. Kuo Indonesia is rich in mineral resources, including coal, copper, in December 2008. Ministries with vested interests in the gold, natural gas, nickel, and tin. The country also has less regulations, such as the Ministries of Finance and Forestry, had significant quantities of bauxite, petroleum, and silver. The not responded to the drafts proposed by the Ministry of Energy country’s industrial production came from the cement, metal and Mineral Resources. The mining sector was unlikely to have mining, and oil and gas industries. Indonesia was among the new projects in the near future as the Government stopped five leading producers of copper and nickel in the world and its issuing new mining permits until the regulations were made tin output was ranked second after China. It was also ranked final. Mining investment fell below $1 billion in 2009 because among the world’s top 10 countries in the production of gold of the uncertainty in the new mining and coal law. BHP Billiton and natural gas. Indonesia was one of the leading exporters of Ltd. of Australia scrapped a study to develop an integrated liquefied natural gas (LNG) (after Qatar) but was a net importer nickel project on Sulawesi Island and the development of a coal of oil. mine in Central Kalimantan Province. Tsingshan Mineral Co. of China scrapped a $500 million nickel project in North Maluku Minerals in the National Economy Province. The new mining law also requires foreign investors to divest shares either to the Government, a state-owned enterprise, Indonesia’s real gross domestic product (GDP) growth was or a local private entity after the fifth year of commercial 4.5% in 2009. The country’s industrial output accounted for production (Mining Weekly, 2009a). 26.4% of its GDP of $561 billion. The industrial sector grew The Government planned to issue a decree to allow miners by 2.1% in 2009. The development of minerals and oil and gas to carry out underground mining in its protected forests. The continued to play a significant role in the country’s economic decree clarifies Indonesia’s 1999 forest law that prohibited growth. The value of mineral commodity production accounted open pit mining in protected forests but did not specify whether for 10.5% of the GDP, and the mining and quarrying sector underground mining was permitted. Thirteen mining companies and the fertilizer sector grew by 4.4% and 1.5%, respectively, were allowed to carry out open pit mining in protected forest during the year. The cement, iron and steel, and oil and gas areas by a decree issued in 2004. The new decree was seen sectors all showed declines in growth. The oil and gas industry as helping to attract mining investment while protecting the contributed $19.8 billion, or 19.5% of the Government environment (Reuters, 2009d). revenues, and accounted for a trade surplus of $29.4 million in The Government approved an export permit for CV Justindo’s petroleum products. The Government encouraged investment new tin smelter and revoked a previously issued permit to in new oil and gas exploration to stem the decline in production PT Bangka Global Mandiri for failing to comply with the (Indonesian Ministry of Industry, 2010). export regulations. The total number of smelters allowed by the Government to export tin was 30. The Government introduced Government Policies and Programs new rules for tin exports following a crackdown on illegal mining on the Bangka-Belitung Islands (Thomson Reuters, In an attempt to attract a new flow of foreign capital and 2009b). investment, the Government opened up industrial sectors to foreign investment and implemented legislation aimed Production at making certain aspects of business more efficient and transparent. The Capital Investment Coordinating Board acts In 2009, production of mined copper and silver decreased as the prime regulator of foreign investments into Indonesia. slightly by an estimated 4% and 5%, respectively, owing to the Investments in the oil and gas sector are governed by a lower grade of the ore mined at Grasberg. The output of smelted separate regulatory regime under the Ministry of Energy and and refined copper remained at the same level as in 2008. Based Mineral Resources; investment is made by entering into a on exports of nickel-cobalt laterite and cobalt content of matte production-sharing contract (PSC) with BP Migas, which produced, output of cobalt metal decreased by an estimated 8%. manages the upstream oil and gas activities. Under the new Production of steel decreased by an estimated 11% owing to low income tax law that became effective on January 1, 2009, capacity utilization by PT Krakatau Steel. The output of bauxite the corporate income tax rate is 28% and will be decreased and aluminum, mined nickel and nickel matte, and mined tin to 25% in 2010. Other taxes on foreign investment include a and tin metal increased slightly owing to the higher commodity value-added tax of 10% on goods and services, a tax of 10% to prices. The country produced about 190 million metric tons 75% levied on the manufacture and importation of luxury goods, (Mt) of bituminous coal and an average of 948,000 barrels per a land and building tax of not more than 0.1% per annum of the day (bbl/d) of oil in 2009, which was short of its targeted output property value, a 5% land acquisition tax, and a 5% deemed of 1.034 million barrels per day. The amount of natural gas profit tax on land sales (Mondaq, 2009). produced and marketed increased slightly by an estimated 4% In 2009, Indonesia was unlikely to complete final and 1%, respectively (table 1). regulations attached to a new mining and coal law passed INDONESIa—2009 12.1 Structure of the Mineral Industry of Sumbawa Regency, West Nusa Tenggara Province, and West Sumbawa Regency, and PT Multicapital formed a consortium State-owned PT Antam Tbk (Antam) produced bauxite, and agreed to buy a 10% stake for $391 million. Multicapital gold, nickel, and silver. PT Krakatau Steel, PT Pertamina, was linked to coal miner PT Bumi Resources (Thomson PT Tambang Batubara Bukit Asam, and PT Tambang Timah Reuters, 2009c). Tbk were engaged in the production of steel, oil, coal, and Newmont Mining expected an arbitration committee to tin, respectively. Private-sector PT Indocement Tunggal decide on the details of the company’s obligation to sell a 17% Prakarsa Tbk was the leading cement producer in the country. stake in its Batu Hijau copper/gold mine on Sumbawa Island to International companies were active in Indonesia’s metals local investors in the first half of 2009. The mining concession mining and processing industries. Partially foreign-owned covered 875 square kilometers (km2). Buyers included Antam, PT Freeport Indonesia and PT Newmont Nusa Tenggara were PT Tambang Batubara Bukit Asam Tbk, and PT Timah Tbk. involved in the mining of copper and gold. PT International Newmont Mining owned 45% of PT Newmont Nusa Tenggara, Nickel Indonesia Tbk produced nickel ore and matte, and which owned the Batu Hijau Mine, and Nusa Tenggara Mining PT Koba Tin produced tin ore and tin metal (table 2). Corp. owned 35%. Nusa Tenggara was owned by Sumitomo Corp. of Japan. PT Pukuafu Indah owned the remaining 20% Mineral Trade (Mining Weekly, 2009b). Sumatra Copper and Gold plc planned to invest in its In 2009, Indonesia’s total exports were valued at Tembang gold-silver project in South Sumatra Province. A $116.5 billion, of which oil and gas contributed 16.3% and budget of $6 million was allocated for exploration during minerals accounted for 14.3%. The export value of oil and gas a 2-year period. A prefeasibility study indicated a resource decreased to $19 billion owing to falling prices. In tonnage, the amounting to 53.7 Mt at grades of 1 gram per metric ton (g/t) country exported 161.3 Mt of coal. The major export partners gold and 11 g/t silver. A mine plan of 2.5-million-metric-ton- were China, India, Japan, the Republic of Korea, Malaysia, per-year (Mt/yr) throughput would produce 4,320 kilograms Singapore, Taiwan, and the United States. Total imports were per year of gold for 8 years. The old Tembang deposit was a valued at $96.8 billion and the major import partners were low-sulfidation epithermal type and was operated by Laverton China, Japan, the Republic of Korea, Malaysia, Singapore, Gold NL in 2000. Sumatra Copper and Gold also planned to Thailand, and the United States. Iron and steel accounted for explore a recently discovered polymetallic (copper, gold, lead, 5.6% of the value of nonfuel imports. The value of oil and gas silver, and zinc) deposit at Sontang in West Sumatra Province imports amounted to $38.6 billion (Indonesian Ministry of (Australia’s Paydirt, 2009b). Industry, 2010). OZ Minerals of Australia completed the sale of its Martabe gold-silver project to China Sci-Tech Holdings Ltd. for Commodity Review $217.5 million, of which $211 million was for the payment of principal and $6.5 million was for expenditure reimbursement Metals on the project. The company also sold assets to China Minmetals Nonferrous Metals Co., Ltd. to enable it to continue Bauxite and Alumina.—United Company RUSAL of mining at the normal rate at the Prominent Hill Mine, to Russia was committed to a planned alumina joint-venture recommence the study of further expansion at the mine, and to project with Antam, which was started in 2007 and was reactivate exploration programs in the Prominent Hill area and valued at $1.4 billion.