The Opportunities of Indonesia’s Natural Resources on Coal Mining Industries
What opportunities could Indonesia’s natural resources give to international mining industries?
Keywords: Indonesia, Natural Resources, Mining, Coal, Iron, Copper, Mining Industries
Source: SGS Indonesia
International global mining companies usually have a positive outlook in terms of their coal and mineral prospects, since Indonesia is seen to be a significant player in the global mining industry, with significant production of coal, copper, gold, tin, bauxite, and nickel due to its abundance of natural resources. In addition to that, Indonesia also continues to be one of the world’s largest exporters of thermal coal and ranked 4th as the world’s top coal producers behind prevailing countries like China, the United States, and India.
With that being said, we should explore the opportunities that Indonesia’s natural resources have given us. What are these opportunities? How could it benefit future mining companies? Read more to find out!
The Development of Indonesia’s Coal Mining Industry and its Natural Resources
With more than 17,000 islands, Indonesia is the largest archipelagic country with an abundance of natural resources. Given its economic situation, Indonesia depends highly on the depletion of natural resources since Indonesia is still a developing country. Thanks to its geological location, Indonesia could produce a large variety of minerals at a very high level.
Minerals have been becoming increasingly significant for a large variety of industries, especially in the electronics sector. As of 2018, the mining industry contributed about 16% to the total export revenue of Indonesia, showing a slight increase over the past two years. Between January and May 2019, the export value of coal in Indonesia reached USD 2.2 billion. In addition, the growth was mainly based on the coal sector which increased from around USD 20.5 billion in 2017 to around 24 billion in 2018.
The production of coal in Indonesia had seen a steady increase over the past decade which reached over 13.88 exajoules in 2020, and in 2018, about 557 million metric tons of coal had been produced in Indonesia. In about 2018, 557 million metric tons of coal had been produced in Indonesia, in which a fixed price of USD 70 per ton of coal sold domestically was set. The Indonesian government introduced a policy of domestic market obligation whereby at least 25% of every coal company’s production must be sold domestically, which was intended for domestic electricity consumption.
South Korea, China, and Japan account for 25 billion in financing for 17.4 GW of coal-fired capacity. Aside from that, these countries also provide technology for coal-fired power plants. During the COVID-19 pandemic, the Indonesian coal industry hadn’t been affected the coal output in 2020 was still even higher than its pre-pandemic output in 2018.
International Mining Companies Who Have Successfully Penetrated the Indonesian Market
- Freeport-McMoran Indonesia
Freeport-McMoRan Inc is an American mining company based in Phoenix, Arizona. They have successfully obtained the Grasberg mine in Papua. In December 2020, they had USD 14.198 billion revenue with an operating income of USD 2.437 Billion and total equity of USD 18.668 billion.
2. Newmont mining
Newmont Mining Corporation based in Denver, Colorado, United States, is the world’s second largest mining company with active mines in Canada, Bolivia, Australia, Indonesia, New Zealand, Turkey, Peru and Uzbekistan. Companies like Battle Mountain Gold, Normandy Mining, and Franco-Nevada Corp. are also part of the Newmont Mining Corporation.
Future Prospects of the Mining Industry in Indonesia
For Indonesia’s coal industry, 2021 has started as a year of optimism. Prices are rising, exports are recovering, and there is less risk of corruption investigation or even competition from clean energy. Sadly, the coal industry in Indonesia is closely related to political interests but the government has provided various support both financially and in regulations issued for the coal industry.
Indonesia is a nation rich in natural resources and with the increasing energy demand to fuel the country’s continuing economic growth. With the strategic geographical position of the country, the industry is seen to continuously have market growth over the 2021–2026 period.
Enter Indonesia’s Coal Mining Industry with BRIGHT Indonesia
Given the abundance of natural resources that Indonesia provide, the coal mining industry would be a very interesting industry to look for. Especially with its prospects in the future.
BRIGHT Indonesia is an ideal business partner for you. We will assist you on the ground, including virtual assistants during the mission, logistical planning, and detailed communication. It can cause your company to focus on developing partnership cooperation rather than the hassles of the business trip.
BRIGHT Indonesia provides several services such as Market Insight Research, Business Partnership Engagement, Management and Strategy Consulting, and Foreign Direct Investment. The services will help your business to:
- Assist you in expanding and developing your business by identification of potential partners.
- Secure the agreement between client companies and future Indonesian business partners by providing a list of potentially suitable partners, arranging business meetings, and acting as a liaison.
- Supporting our foreign client companies from the private sector with developing corporate or business unit strategies or helping your company from public sector organizations with public policy.
- Link client companies both from the private and public sectors in global foreign direct investment (FDI) through training and assisting your company in entering FDI source countries to gather investment for your company’s local markets.
For more information, email info@brightindonesia.net.
*This article is written by Aurellea Dashaliva
