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Indonesia Mining Report Q3 2016

  • September 2016
  • -
  • Business Monitor International
  • -
  • 85 pages

Includes 3 FREE quarterly updates

BMI View: Indonesia's mineral production growth will remain slow on the back of heightenedenvironmental protection, slowdown in the Chinese economy and continued mineral price weakness. Theimpending ban moderation on the export of mineral ores will provide some respite to production, especiallyin the case of bauxite.

Latest Developments & Structural Trends

- We expect the Indonesian government will push ahead with its February 2016 proposal to revise thecountry's mineral ore export ban by September 2016 as expected investment in the downstream sector hasnot materialised. The bauxite sector will benefit most from the relaxation of the ban, as the sectorregistered poor smelter construction and the greatest loss in revenues as a result of the ban. We expect ourcurrent production forecasts to face upside risks due to the impending ban moderation.

- We forecast bauxite production growth in Indonesia to register an annual average of 148.2% during2016-2020, mainly because of acceleration in production in 2016 of 600% due to China Hongqiao GroupLimited's smelter facility coming online. Hongqiao will initially produce one million tonnes per annum ofaluminium, doubling capacity by 2017. One tonne of aluminium requires approximately five tonnes ofbauxite to produce. Contrary to numerous smelter project proposals in 2014 and our past expectations onhigh smelter investment from China, smelter investment for bauxite has been stagnant as a result of lowprices and lack of funding. In March 2016 Hongqiao started trial runs in its new alumina smelter inIndonesia, adding to the only other smelter in the country, PT Indonesia Chemical Alumina, a subsidiaryof diversified local miner PT Antam.

- We expect Indonesia's coal production to fall by 15.0% to 314 million tonnes in 2016, followed bysubdued growth henceforth to 2020, registering an average annual growth of 3.0% per annum during2016-2020. Over the long term, despite the one time fall in domestic production due to the crackdown onillegal mining in 2015, we believe output will be supported by strong demand from a domestic pipeline ofcoal-fired power plants. Although emerging economies like the Philippines will continue to rely onIndonesian coal for power generation, a spate of piracy incidents in the last few months attackingIndonesian ships will undermine shipments in the upcoming quarters. Additionally, India's ramping up ofdomestic coal production will eventually reduce the country's reliance on Indonesian coal imports in thecoming years.

Table Of Contents

Indonesia Mining Report Q3 2016
BMI Industry View 7
Table: Indonesia - Mining Industry Value Forecast (2012-2020) 7
Latest Developments and Structural Trends 7
Industry Forecast 11
Bauxite: Hongqiao To Drive Growth 11
Latest Developments 11
Table: Bauxite Production Forecast (Indonesia 2012-2020) 11
Table: Indonesia - Major Bauxite Project 12
Structural Trends 12
Nickel: Strong Growth Ahead 16
Latest Developments 16
Table: Nickel Production Forecast (Indonesia 2010-2020) 16
Table: Indonesia - Select Nickel Projects 16
Structural Trends 17
Coal: Domestic Demand To Drive Growth 20
Latest developments 20
Table: Coal Production Forecast (Indonesia 2012-2020) 20
Table: Indonesia - Select Coal Projects 20
Structural Trends 21
Copper: Steady Growth Ahead 29
Latest Developments 29
Table: Copper Production Forecast (Indonesia 2012-2020) 29
Table: Indonesia - Major Copper Projects 30
Structural Developments 30
Grasberg To Drive Output Growth 33
Tin: Environmental Regulations To Slow Growth 35
Latest Developments 35
Table: Tin Production Forecast (Indonesia 2012-2020) 35
Table: Indonesia - Major Tin Projects 36
Structural Trends 36
Industry Risk Reward Ratings 40
Risk/Reward Index 40
Rewards 40
Industry Rewards 40
Country Rewards 40
Risks 40
Industry Risks 40
Country Risks 41
Asia Risk/Reward Index 41
Key Takeaways 41
Latest Revisions 42
Table: Asia - Mining Risk/Reward Index 43
Regulatory Development 44
Key Developments 44
Ban Moderation On The Horizon 44
Table: Indonesia - Export Restrictions On Select Commodities 45
The 2009 Mining Law 45
Trade and Investment Risk Analysis 47
Commodities Forecast 51
Commodities Outlook 51
Table: BMI Commodities Price Forecasts 51
Competitive Landscape 52
Key Players 52
Table: Financial Data For Key Mining Firms Listed In Indonesia 53
Company Profile 55
PT Antam 55
Table: PT Antam - Key Financial Data 57
PT Bumi Resources 58
Table: Bumi Resources - Key Financial Data 60
PT Indo Tambangraya Megah Tbk (ITMG) 61
Table: ITM - Key Financial Data 62
PT Timah 64
Table: PT Timah - Key Financial Data 66
Freeport-McMoRan - Q3 2016 68
Table: Select Commodities - Price Forecasts 70
Table: Freeport McMoRan - Key Financial Data 75
Regional Overview 76
Asia Overview 76
Slowing Iron Ore Production 76
Indian Coal Consumption To Outperform 77
China and India To Lead In Outbound Investment 78
Indonesian Ban Moderation Ahead 79
Chinese Coal and Steel Sectors To Consolidate Slowly 81
Methodology 82
Industry Forecast Methodology 82
Sources 83
Risk/Reward Index Methodology 84
Table: Weighting Of Indicators 85

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