Overview
Indonesia is one of the world’s largest producers of tin (ranked 2nd after China), coal (ranked the 3rd largest thermal coal exporter after Australia and South Africa) and copper (ranked 3rd largest, after the USA and Chile). It also produces significant quantities of gold and nickel. Minerals and related products represented 19% of Indonesia’s total exports, with gold being the largest revenue earner. Indonesia is also a producer of bauxite, phosphates and iron sand, with potential for alluvial diamond production as well.
Despite being conveniently situated on the Pacific Rim, close to Asian and Australian markets, exploration and development in Indonesia have experienced several setbacks. Aside from the Bre-X Busang scam, the industry has been experiencing extreme pressure from environmental and social groups with respect to mining activities. A similar scenario is occurring in neighbouring Papua New Guinea. Legislation introduced by the Indonesian government calls for the protection of forested areas, including prohibition of any prospecting or open cast mining to occur in these areas, subject to specific approval from the government. This will exclude large parts of prospective areas in Indonesia as well as terminating several ongoing exploration programs that already spent vast exploration dollars.
During 2003, efforts were made by the IMA and the Indonesian Coal Mining Association (ICMA), fully supported by the Department of Energy and Mineral Resources, to have Forestry Law No41 of 1999 amended or retracted. The law inhibits open-pit mining in ‘protected forests’. Similar efforts were made with regard to the value-added tax (VAT) Law No18 of 2000 and Government Regulation 144/2000, which categorises coal, gold and silver as non-taxable commodities. On May 12, 2004, President Megawati issued Decree No41/2004 allowing open-pit mining in protected forests, as long as the mining companies had contracts prior to the introduction of Forestry Law No41/1999.In July 2004, the House of Representatives agreed to ratify perppu No1/2004, so that it became a law.
The current “Contract of Work” or COW needs to be reviewed, as several mining operations have been closed down by the government, claiming unpaid minerals taxes, amongst others. Other issues such as lack of clarity on the role of the informal mining sector has resulted in violence on several mining operations with illegal occupation by informal miners. It is clear that for any future investment in Indonesia, these issues need to be cleared up as soon as possible.
Organisations (54)
Pt Elka Surya Abadi, PT Galuh Cempaka, Antam Tbk ( ANTM ), Apexindo Pratama Duta Tbk ( APEX, Aurora Gold Ltd (Indonesia), Austindo Resources Corporation NL (Indonesia), Batu Hijau copper-gold-mine, Bumi Resources, CV. Subur, Department of Mines and Energy, Dewata Coal,Mining,General Contractor & General Tradining, Directorate of Mineral Resources and Geological Research and Development Center, Golden Valley Mines NL, Indonesia Coal, Kerub Indonesia, Koperasi Nusantara, Laverton Gold NL, Masmindo Mining Corporation NL, Meekatharra Minerals Ltd, P.T. Adaro Indonesia
Facilities (27)
Batu Hijau, Bintan Island, Cempaka, Cibaliung, Cikidang, FeNi II Nickel smelter, Gag Island, Gebe Nickel Mine, Gee Island, Gosowong, Grasberg, Halmahera, Kaltim Prima, Kelian Equatorial, Minahasa, Mt Muro, Pentangis, Petangis, Pomalaa Nickel Mine, Pongkor
