INDONESIAN MINING POLICY UPDATE -...
Transcript of INDONESIAN MINING POLICY UPDATE -...
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INDONESIAN MINING POLICY UPDATE
By:
Syawaludin Lubis
Director of Environmental Engineering for Mineral and Coal
MINISTRY OF ENERGY AND MINERAL RESOURCES
Outline
I. CURRENT CONDITION..........................................................................................
II. POLICY AND REGULATION..................................................................................
III. INVESTMENT OPPORTUNITIES………………………………………………….................
IV. GOVERMENT INCENTIVES AND DISINCENTIVES............................................
V. CLOSING REMARKS............................................................................................
I. CURRENT CONDITION (1)
Demand for energy, materials, water and other key
resources demand is likely to increase rapidly
Indonesia today… …and in 2030
Source: McKinsey Global Institute, 2012
I. CURRENT CONDITION (2)
20.21
40.70
32.90
2.47.1
19.18
Massive untapped resources with huge potential for domestic mineral
processing and refinery
Potential for domestic
processing and refinery
Production Existing domestic plants capacity
391
82
Units in million ton
Copper Bauxite Nickel Coal
Reserve
Production
rate (2012)
Ferro and Associates , a.l. : Nickel, Iron, Nickel, Cobalt, Manganese, Chromite
Precious Metal, a.l. : Gold, Silver and Platinum
Base Metal , a.l. : Zinc, Copper, Tin, reciprocal
Rare metal, a.l. : Bauxite, Monazite
I. CURRENT CONDITION (3)
Source: Indonesian Geological Agency, 2011
A world’s major producer of tin, nickel, copper, bauxite, and gold
Very High (anthrasit) ( > 7.100 cal/gr ) Medium (Sub Bituminus)( 5100 - 6100 cal/gr )
High (Bituminus) ( 6.100 - 7.100 cal/gr ) Low (Lignite) ( < 5.100 cal/gr )
Source: Indonesian Geological Agency, 2012
I. CURRENT CONDITION (4)
28.9 billion ton
Reserves
119.4 billion ton(open pit resources)
Resources
National coal deposit are mainly located in Kalimantan and Sumatera
MINERALS AND COAL PRODUCTION AND EXPORT (2009-2012)
0
20
40
60
80
2009 2010 2011 2012
Copper (000 ton)
Silver (ton)
Gold (ton)
Tin (000 ton)
Bauxite (mn ton)
Nickel ore (mn ton)
Iron ore (mn ton)
Production
Export
0
200
400
600
800
1000
1200
2009 2010 2011 2012
0
100
200
300
400
500
2009 2010 2011 2012 2013f
mil
lio
n t
on
Domestic use Export
254
275
353
386 391
Coal
Minerals• Indonesia’s overall copper, silver and gold
production were slightly lower during 2010-
2011, however upturn trend seen in 2012
• Significant nickel, bauxite and iron ore
production during 2010-2011 allegedly due to
the ban on exports of raw material in 2014
• Coal production has increased in recent
years in line with the national energy policy
that relies on coal
I. CURRENT CONDITION
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2010 2011 2012
Inve
ste
me
nt
(mn
US
$)
Coal
Contract of
Work (COW)
Mineral
Contract of
Work (COW)
State-owned
enterprise (SOE)
Mining
services
3,1863,412
4,226
In the last three years, investment growth in mining
sector rose by 17% annually
ENERGY AND MINERAL
RESOURCES FOR THE
WELFARE OF THE PEOPLE
II. ROLE OF MINING SECTOR
PRO JOB
(job creation)
PRO GROWTH
(Economic growth)
COMDEV & CSR
PRO POOR
(equitable distribution of income)
GOOD MINING PRACTICE
RECLAMATION & MINE CLOSURE
PRO ENVIRONMENT
(Sustainability and environmentally sound mining)
EMPLOYMENT
LOCAL CONTENT
STATE REVENUE
INVESTMENT
ADDED VALUE
BALANCE OF TRADE
(PRODUCTION, EXPORT,DOMESTIC)
Mining sector has multiple roles in Indonesian economy and serves as a prime-
mover for regional development
II. POLICY AND REGULATION
Law No 4/2009: Mineral and Coal Mining
1945 Constitution
(Art. 33)
Efficient, effective and competitive
mining business activities
Sustainable benefit and
environmentally-sound
mining
Legal certainty in
mining business activities
Domestic market
obligation
Support and develop the
national capability
Source of income and job creation
for local, regional and
state
GR 22/2010:Mining Areas
GR 23/2010:Mining business
activities
GR 55/2010:Direction and Supervision
GR 78/2010:Reclamation and
Mine Closure
GR 24/2012:Review on GR 23/2010
MR 28/2009:Mining Services
MR 34/2009:
DMO
MR 17/2010:Benchmark
Price
MR 12/2011:Mining
Business Areas
MR 7/2012:Mineral
Beneficiation
MR 11/2012:Review on MR 7/2012
Policy
Law
Govt.
Regulation
Minister
Regulation
Constitution
MR 4/2013:Deconcentration
MR 2/2013:Supervision on
Regional Government
MR 12/2011:Mining Commercial Business
Area Determination
New mining law and issuance of key implementing regulations
MR 24/2012:Review on
MR 28/2009
II. POLICY AND REGULATION
Mining Smelting Refining End-User
Concentrate Anodes Cathodes Various
Copper
Mining
Iron ore
• Ore dressing• Agglomeration• Iron making• Steelmaking
casting
• Hot forming
• Cold forming
Finished product
Applications
Iron steel
MiningSmelting
(upstream)Refining
(downstream)
Nickel oreNickel matte ,
FerronickelHigh grade nickel
products
Nickel
DownstreamSmelting
Non Existing Industry
Coal
Upgrading
Active carbonCoking coalGasificationLiquefaction
Conversion
High rank coal
2014
Due date for adjustment to minimum beneficiation process requirement
Without more downstream activities, Indonesia will miss the opportunity to increase
employment and profit margins on the value chain because of the absence of
downstream processing industries
III. INVESTMENT OPPORTUNITIES
• G & G survey• Exploration drilling• Expert consultancy
Exploration Stage
• Expert consultancy• OB removal and handling• Sale and rental of heavy equipment• Tailing and waste management• Power plant development (for processing plant
and mine mouth CFPP)• Transportation
Operations Stage
• Expert consultancy• Reclamation &
mine closure
Mine Closure Stage
Up
stre
am &
su
pp
ort
ing
Do
wn
stre
am
Join the bidding scheme for Commercial Business Area
Coal and Metal
Request for ComercialBusiness Area
Stones and Non Metal
or
Mineral processing and refinery plant
Minerals
• Coal gasification• Coal upgrading • Coal liquefaction
Coal
Apply for transporting and selling special permit
Trading support
Investment opportunities available in all phases of mining activities
IV. INVESTMENT OPPORTUNITIES
Copper processing and refinery plantBauxite processing and refinery plantNickel processing and refinery plant
Development of mineral processing and refinery plant/facility exist throughout the whole
economic corridors which were included in MP3EI
IV. INVESTMENT OPPORTUNITIES
• Development of coal railway in Central Kalimantan with total length of 1,829 km.
• Project cost estimate: US$ 7 million/10 km
To increase connectivity between coal mine locations and port
The development of the coal railway network in Central Kalimantan will secure the
supply of coal from one of Indonesia’s coal-rich province.
Very High (anthrasit) ( > 7.100 cal/gr ) Medium (Sub Bituminus)( 5100 - 6100 cal/gr )
High (Bituminus) ( 6.100 - 7.100 cal/gr ) Low (Lignite) ( < 5.100 cal/gr )
IV. INVESTMENT OPPORTUNITIES
Coal Gasification (US$ 2.5 billion)Coal Upgrading (US$ 1.1 billion)
Coal Upgrading (US$ 2 billion)Coal Blending (US$ 40-50 million)
Coal Blending (US$ 30-40 million)
Coal Blending (US$ 30-40 million)
Kuala Kapuas, Central Kalimantan
East Kutai Timur, East Kalimantan
Samarinda, East Kalimantan
Tanah Bumbu & Tanah Laut, South Kalimantan
Coal beneficiation plant/facility to be built in Kalimantan—the country’s largest coal
producing region
IV. INVESTMENT OPPORTUNITIES
Copper processing and refinery plantBauxite processing and refinery plantNickel processing and refinery plant
571 MWUS$ 130-150 mn
Sulawesi
985 MWUS$ 150-170 mn
Papua - Maluku
50 MWUS$ 110-150 mn
Bali – Nusa Tenggara
1,103 MWUS$ 130 mn
Kalimantan
810 MWUS$ 90-100 mn
Jawa
1,395 MWUS$ 100-130 mn
Sumatera
*Project cost estimate is
calculated per 100 MW
Development of mine mouth coal fired and independent power plant to secure national
electricity supply including mineral beneficiation policy
IV. INCENTIVES AND DISINCENTIVE
Fiscal incentives:
1. Tax allowance (GR No 52/2011)
2. Tax holiday (MoFR No 130/2011)
3. Import duty exemption from
capital goods
Other incentives:
4. DMO (MoEMRR No 34/2009)
5. Coal special price for mine mouth (DGMC Regulation No 1348/2011)
Disincentive
20% export duty on 65 items of iron minerals, non-iron minerals and stones
(MoFR No 75/2012)
IV. CLOSING REMARKS
1. Indonesia has mineral and coal resources and reserves that still
prospective to be exploited in the future both in the upstream and
mainly to the downstream industry as well.
2. Obligation to increase added value domestically and supporting
regulations provide opportunity for establihsment of mineral
processing and refining plant in Indonesia.
3. Indonesia still needs big investment to develop the potency on
mineral and coal and encourages all private investment,
especially for mineral and coal processing and refinery.