Mitrais Mining
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October 2019 | Vol. 41

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Weekly News

Disclosure Regarding Mining Contracts, Licenses Essential


Indonesian mining contracts and licenses — the documents detailing the government’s agreements with companies for the exploitation of minerals — remain out of public view despite legislation and court orders that support their publication.

While Indonesian civil society groups strongly support publication, the government has defended its nondisclosure of mining contracts and licenses on the basis that they include confidentiality clauses or that disclosure will hurt the commercial competitiveness of the companies.

Yet, 44 other countries have already started disclosing extractive industry contracts and licenses. This is a shame for Indonesia considering that national legal provisions mean it could be a leader in this global trend.

Contract disclosure benefits not only governments and citizens, but also the private sector. Industry players, including mining giants like Freeport McMoran and Rio Tinto, which have operated in Indonesia, have expressed their support for the practice.

President Joko “Jokowi” Widodo’s government has made clear that it wishes to combat corruption. Publication of contracts and licenses is a crucial part of fighting graft as it allows government employees and the wider public access to the deals that government negotiators have secured and to hold them to account.

Agreeing to publish contracts adds an important dimension of ex-post accountability to negotiation processes. As noted by the Organization for Economic Cooperation and Development, when parties know that contractual terms will be made public, they are more likely to negotiate and draft in a manner to ensure that terms are able to withstand public and commercial scrutiny.

The legal basis to publish mining contracts and licenses in Indonesia has existed for over 10 years. Article 11 of the 2008 Central Information Commission (KIP) Law mentions that public bodies must make accessible “at any time any agreement between public bodies and third parties”.

This law complements Article 33 of the 1945 Constitution, which stipulates that natural resources “[…] shall be under the powers of the state and shall be used to the greatest benefit of the people”. In this sense, the government reaches agreements with companies on the people’s behalf and it is therefore only right that the people know what is on the table.

Disclosing contracts under these laws has been approved by the courts. In a non-litigation adjudication case in 2012, the KIP ordered the Energy and Mineral Resources Ministry to share copies of three mining contracts requested by the Foundation of Publication Information Development (YP2IP).

Three years later, the Supreme Court handed down a similar verdict, this time involving 700 East Kalimantan mining licenses sought by the Network for Mining Advocacy (Jatam) from the provincial administration.

The most common arguments against contract and license disclosure do not hold up. My colleagues at the Natural Resource Governance Institute and I reviewed the terms generally included in Indonesian mining contracts and licenses and found that they are unlikely to contain commercially sensitive information. Freeport Indonesia demonstrated this by making its contract publicly available on the United States’ Security and Exchange Commission website.

Likewise, legal language on confidentiality in legislation and the Freeport contract suggests that confidentiality requirements in Indonesia are not intended to extend to contract or license documents.

In a relatively positive step, the Energy and Mineral Resources Ministry established a request system for contract and license documents, but the system is hardly ideal. Petitioners must go through the bureaucratic hassle of submitting documents and waiting for the ministry to come to a decision, in violation of the KIP Law that mandates the information to be provided “at any time”. Doubled with a rather bad experience when requesting contracts to be disclosed, this situation discourages citizens and groups seeking contracts, therefore killing the spirit of transparency.

As noted in the latest Indonesia Extractive Industries Transparency Initiative report, the Energy and Mineral Resources Ministry system has in practice not resulted in public disclosure of contracts or licenses. It would be far better for the government to proactively disclose contracts on a public information portal. Not only would this make it easier for citizens to access these important documents, it would spare the government time spent processing citizen requests.

The existing Mineral One Data Indonesia (MODI) portal would be a natural place for the government to proactively disclose contracts and license documents. Of course, there will be challenges along the way, but officials addressing these challenges can learn from other countries that have published extractive industry contracts, such as Mexico, Mongolia and Sierra Leone.

The question facing the Jokowi government is clearly not whether they should make contracts and licenses public, but rather how the government can move to implement disclosure of contracts and licenses. Disclosure is both crucial and feasible.


Source : https://www.thejakartapost.com/news/2019/10/02/disclosure-regarding-mining-contracts-licenses-essential.html

Weekly News

ANTAM Records Positive Unaudited Performance On the First Half of 2019 With Net Profit of Rp365.75 Billion


PT Aneka Tambang Tbk (ANTAM; IDX: ANTM; ASX: ATM) is pleased to announce positive result on Company’s operation and financial unaudited performance for the first half of 2019 (1H19). In 1H19 ANTAM’s record net profit of Rp365.75 billion, rose 6% compared to net profit of Rp344.45 billion on the first half of 2018 (1H18). The solid performance of ANTAM’s production and sales figure in 1H19 are also reflecting on Company’s net sales number, amounted to Rp14.43 trillion, increase 22% compared to 1H18 net sales figure of Rp11.82 trillion. ANTAM’s solid financial performance was also reflected from Earning Before Interest, Taxes, Depreciation and Amortization (EBITDA) in 1H19 which amounted to Rp1.46 trillion, an increased of 6% from 1H18 EBITDA level of Rp1.38 trillion. Gold is the largest contributor for ANTAM’s revenue, amounted to Rp9.61 trillion or 67% of total net sales in 1H19.

ANTAM solid financial performance also reflected by improvement of the Company’s S&P Global corporate credit rating in 2019 from “B-/outlook stable” to “B-/outlook positive” as well as the improvement of ANTAM’s Corporate and Sustainable Bonds I Year 2011 Rating conducted by PT Pemeringkat Efek Indonesia (PEFINDO) from “idA-/outlook stable” to “idA/outlook stable”. This improvement are based on the assessment of Company’s financial & operational positives growth performance outlook for twelve month period ahead.

Solid Performance of ANTAM’s Production & Sales During 1H19

Positive performance of ANTAM’s operation and sales of company’s main commodity on 1H19 also reflected on ferronickel production volume achievement that reached 13,017 ton nickel in ferronickel (TNi), rose 2% compared to ferronickel production volume of 12,811 TNi in 1H18. Along with the rise on production volume, ferronickel sales on 1H19 reached 13,157 TNi or increased 5% compared to 12,579 TNi on 1H18. In 1H19, ferronickel sales was the second largest contributor to ANTAM’s sales, amounting Rp2.31 trillion or 16% of total sales on 1H19.

As for ANTAM’s gold commodity, on 1H19 the production volume of gold from Pongkor and Cibaliung Mine reached 979 kg (31,476 troy oz.). Meanwhile the total sales volume reached 15,741 kg (506,084 troy oz.) or increased by 14% compared to gold sales volume of 13,760 kg (442,394 troy oz) in 1H18. The increasing of ANTAM’s gold sales was aligned with ANTAM’s strategy on the optimization of its gold refinery utilization and also expanding ANTAM’s commodity marketing channel for both domestic and export markets as well as innovation on ANTAM’s Logam Mulia gold product.

On nickel ore commodity, production volume of nickel ore in 1H19 amounted to 4.79 million wet metric ton (wmt), or increase up to 27% compared to 3.77 million wmt in 1H18. Meanwhile, total nickel ore sales volume reached 3.90 million wmt, increased by 103% compared to nickel ore sales volume of 1.92 million wmt in 1H18. ANTAM’s revenue from nickel ore amounted to Rp1.76 trillion in 1H19, a 107% growth compared to nickel ore sales revenue in 1H18. In addition, bauxite commodity also delivered positive contribution for Company’s performances during 1H19 period. Bauxite production volume posted 597 thousand wmt, an increase of 43% YoY with sales volume amounted to 611 thousand wmt, that increased by 138% YoY. In 1H19, revenues from the sales of bauxite were recorded at Rp296 billion, increase 136% compared to 1H18.

ANTAM’s Downstream Development Project

ANTAM main project under development includes of East Halmahera Ferronickel Plant Development Project (P3FH) with production capacity of 13,500 TNi (Line 1). In 1H19 construction progress reached 97%. After completion of P3FH (Line 1), ANTAM’s ferronickel annual production capacity will increase to 40,500 TNi from the existing production capacity of 27,000 TNi (increase by 50%). On bauxite commodity, ANTAM is currently focusing on the development of Smelter Grade Alumina Refinery (SGAR) plant with PT INALUM (Persero) with an estimated total production capacity of up to one million ton SGA per annum (Stage 1).

ANTAM’s Positive Share Performance During 8M19 Period

At the end of August 2019 (8M19), ANTAM’s shareholders recorded at 47,080 investors. In 8M19, ANTAM closing share price reached Rp1,070 per share, improved by 40% compared to ANTAM closing share price at the end of December 2018 of Rp765 per share. ANTAM’s positive share (ticker: ANTM) performance in 8M19 was reflected by the growth of daily average shares volume traded that reached 107.79 million shares, increased by 32% compared to daily average shares volume traded in 8M18. An average daily trading value also reached Rp101.23 billion, increased by 44% compared to 8M18. Moreover, ANTM remains part of the LQ45 and IDX30 index at the Indonesia Stock Exchange (IDX). The LQ45 and IDX30 Index lists companies with the highest liquidity at the IDX.


Source: http://www.antam.com/index.php?option=com_content&task=view&Itemid=144&id=1138

Weekly News

Five Bukit Asam Scholarship Grantees Graduated from Polinema


Five Bukit Asam scholarship grantees graduated from Malang State Polytechnic and were welcomed by PT Bukit Asam’s CSR Planning Manager, Roy Ubaya.

Bukit Asam was very concerned in poverty alleviation and education. This scholarship was given to high school and vocational high school students from disadvantaged families who were potentially promising and had good academic grades, with the purpose of giving them added value.

Bukit Asam hoped that this opportunity could provide more value for their family and the people around them.


Source: http://www.ptba.co.id/en/news/detail/1139/five-bukit-asam-scholarship-grantees-graduated-from-polinema

Weekly News

Vale’s Boss from Brazil Meets Jokowi to Discuss Divestment


PT Vale Indonesia’s (INCO) holding company in Brazil was invited to meet President Joko Widodo to discuss the divestment of 20 percent of INCO’s shares that will due in October. Vale Indonesia’s shareowners consist of Vale Canada Limited (58.73 percent), Sumitomo Metal Mining Co Ltd (20.09 percent), Vale Japan Limited (0.55 percent), Sumitomo Corporation (0.14 percent), and the public (20.49 percent). “[We] invited them to provide a long-term [commitment] in Indonesia. So, Vale group wants to be committed to staying for a long time in Indonesia,” Vale Indonesia CEO Nico Kanter said at the Presidential Palace in Central Jakarta on Monday (23/09/2019). Kanter added that the President would help to expedite the divestment process.


Source: http://www.vale.com/indonesia/EN/press/pt-vale-on-news/Pages/detikcom-09232019.aspx

Weekly News

Aneka Tambang Cancels Its Plan to Acquire Newcrest Mining Shares


PT Aneka Tambang Tbk (ANTM) cancelled its plan to acquire 26% stake in Newcrest Mining, an Australian mining company, from PT Nusa Halmahera Minerals (NHM).

Arie Prabowo Ariotedjo, President Director of ANTM, said that until now, his party had not received an official offer from Newcrest. In addition, he considered the mine was not attractive because the reserve volume was less than 300 thousand Oz and will only last 2 years.

“It became less attractive to be acquired because of contingent liabilities that must be taken into account,” Ariotedjo was quoted as saying by Kontan, on Sunday (29/9) yesterday.

In addition, ANTM must assume obligations for environmental impacts for 30 years after the mine closed. For information, NHM is required to divest its shares no later than 2020.

 


Source: https://www.idnfinancials.com/news/28982/aneka-tambang-cancels-plan-acquire-newcrest-mining-shares

Weekly News

Timah Lost Rp 26 Billion in Q2 2019


PT Timah (Persero) Tbk (TINS) lost Rp 26 billion in the second quarter (Q2) of 2019, since its cost of good sold (COGS) rose to Rp 5.3 trillion.

Ariyanto Kurniawan and Wesley Louis Alianto, analysts of the mining sector in Mandiri Sekuritas, said that TINS’ COGS ​​is 174% higher than the figure recorded in the same quarter last year (YoY) and 53% from Q1 2019. “The high COGS was mainly caused by the high cost of raw materials, third-party services operating expenses,” said the two analysts on Monday (30/9), to idnfinancials.com.

In addition, Mandiri Sekuritas assessed that the large inventory of TINS ​​made the cash flow from operating activities became negative in June 2019. “The company needs to reduce its inventory to increase its CFO (Cash Flow from Operations), which in our opinion will also reduce its capital requirements,” said Kurniawan and Alianto .

So far, Mandiri Sekuritas assesses that TINS’ ​​revenue has the potential to decrease in the 2019 fiscal year. Even though a number of illegal mines have been closed down, TINS has to face the fact that tin price fell from US$ 21,000/ton to US$ 16,000/ton.


Source: https://www.idnfinancials.com/news/28987/timah-lost-q

Weekly News

Nusantara Resources Limited - We Have Delivered on Our IPO Promises


Nusantara’s Awak Mas gold project in South Sulawesi is on track to become the Asia-Pacific’s next gold producer after delivering on all the promises made in last year’s float on the Australian Securities Exchange.

These include ticking off the key milestones including a Definitive Feasibility Study that confirms a financially robust, long-life asset with strong growth potential.

On the back of the DFS and with all regulatory approvals in place for development, we are now progressing financing, both for the planned core mine operation and further exploration of the best potential nearby areas under our exclusive Contract of Work (CoW) with the Indonesian Government.

In addition, Nusantara is in discussion with strategic partners to support overall development of the project with production expected in 2021 and an after-tax payback period of 4 years.

To enhance the project, our immediate exploration focus is on significant mineralisation within 3km of the proposed processing plant.

Announcing delivery of key objectives set in the 2017 IPO – which included increasing the mineral resource, securing a long-term CoW, and completing a DFS – our MD and CEO Mike Spreadborough noted that Nusantara had now identified a 2.0 Moz mineral resource and 1.1 Moz of ore reserves in a highly desirable gold mining region of the world.

He said the DFS supported an initial 11-year project producing approximately 100,000 oz per year delivering a post-tax NPV of US$152 million with a 20.3% IRR using a gold price of US$1,250 per ounce. The DFS identified an initial capital cost of US$146 million, pre-production mining expenditure of US$16 million, and project sustaining capital of US$29 million. All-In Sustaining Cost (AISC) was US$758 per ounce.

Mike added that on the back of the DFS, discussions with financiers are progressing positively with first gold production targeted for 2021.

He said recent exploration had demonstrated the potential of Awak Mas to provide high-grade satellite operations to add to production from the existing deposits. “Our confidence in the exploration model, together with renewed focus on geophysics and the possibility of further and substantial discovery, add enormously to the future long-term viability of the project”.

Nusantara’s CoW runs to 2050 with partial divestment, at fair value based on international standard criteria, not required until 10 years after first production.

The immediate exploration focus is on exciting prospects within a 3km radius of the proposed processing plant. The program also includes re-processing previously acquired geophysical data, which is demonstrating potential for additional discoveries across the entire CoW.

Awak Mas remains one of a few undeveloped gold projects within the Asia-Pacific. Its location is supported by access to low cost grid power and port facilities just 45km away.

Sulawesi has a long history of mining and provides ready access for Awak Mas to experienced contractors, services and a skilled workforce for the construction and operation of the mine. Operations will be underpinned by a logistics centre on the coast in Belopa and a support centre in the city of Makassar.

Indonesia continues to provide a stable and supportive environment for mining operators with investment grade credit ratings and is highly rated by global mining investors.

Reflecting on the recent milestone achievements, Mike said, “we are seeing our understanding of the geology continue to rapidly evolve, which fits well with our goal of growing the project life beyond eleven years.”


Source: https://nusantararesources.com/newsroom

Weekly News

European Commission to Probe Stainless Steel Imports


The European Commission initiate an anti-subsidy investigation into hot-rolled stainless steel coils from China and Indonesia.

The probe is part of an ongoing anti-dumping investigation. The EU implemented a definitive safeguard measure in February and began a review of the measure in May.

Under the existing definitive safeguard measure on steel, which will be in effect for three years, a 25pc duty will be applied for imports above product-specific quotas. But stainless steel imports from China and Indonesia were excluded from this safeguard measure and no import duty is imposed on them.

However, many market participants said the existing safeguard was not effective against cheaper imports from China and Indonesia, which continued to flood the European market. Mills and trade associations have lobbied for an investigation, and import tariffs on Chinese and Indonesian products, to protect their domestic market.

Chinese stainless steel mills operating in China and Indonesia primarily use nickel pig iron (NPI) for their feedstock. European mills use stainless steel scrap as their main feedstock for production.

Commonly used stainless steel 304 series contains 8pc nickel and 18pc chrome.

But NPI is significantly cheaper than other raw materials, giving Chinese stainless steel mills an unfair cost advantage over European mills.

This has cut European stainless steel mills’ sales in Europe as they struggle to compete with cheaper imports.

Imports of stainless steel hot-rolled and cold-rolled coils — with harmonised tariff codes 7219 and 7220 — from China increased to 61,835t between January and August this year, up by 12.8pc from the same period last year, according to trade data.

Imports from Indonesia nearly doubled year on year to 2,628t in the first eight months of 2019, a surge of 82pc from 1,444t in January-August 2018.

To compete with Chinese and Indonesian imports, European stainless mills are negotiating for bigger discounts for nickel content in 304 stainless steel scrap. Payables for the nickel content in stainless steel scrap in the fourth quarter are expected to be lower than 60pc of the nickel contract traded on the London Metal Exchange.


Source: https://www.argusmedia.com/en/news/1988377-european-commission-to-probe-stainless-steel-imports

Weekly News

Freeport-McMoRan: Don't Lose Faith


Summary

  • Freeport-McMoRan continues to trade below $10 per share due to weak copper prices.
  • The company doesn’t expect full production for the Grasberg mine to return until 2021.
  • The stock is likely to struggle as the company reports weak Q3 cash flows due to copper prices ending the quarter at $2.60/lb.
  • Buy the stock below $10 for the rebound in 2020 and beyond.

While Freeport-McMoRan (FCX) didn’t hold $10, the stock still has substantial value at this level. Copper remains weak due to the U.S. trade war with China, but this trading skirmish won’t last forever. The investment thesis remains very bullish on the future of copper and this stock, especially when one can purchase shares below an identifiable value at $10.

Copper Prices Rule

For the most part, Freeport-McMoRan trades based on the price of copper. The company is generally classified as a copper miner despite also mining gold and molybdenum.

Regulatory issues in places like Indonesia impact the stock, but Freeport-McMoRan is still generally ruled by copper prices. The reason the stock is now below $10 is the multi-year lows in copper prices. Prices recently broke the resistance right above $2.60/lb and now trades near these lows at $2.61/lb.

Recent inventory info suggests the market is coming down from the normal inventory highs over the summer months as global economic slowdown was thought to contribute to a build in inventories. A lot of unknown inventory exists in the Chinese market so the actual supply levels are always unknown.

Xiao Fu, head of commodity market strategy at Bank of China International, actually sees the fundamentals for copper as strong due to low inventory levels:

“In copper, I think there’s a tug of war between the macro headwinds and the fundamentals, because inventory levels are quite low, so we may see rangebound trade.”

What the market continues to know is that long-term demand continues to grow and the project pipeline for new mines is limited due to low incentive prices. Miners are predicted to need prices around $3.30/lb in order to warrant building new mines.

Where Copper Is Headed

Nothing is guaranteed in the commodity price world, but somebody investing on the future has to like the positioning of Freeport-McMoRan. The copper miner is positioned to benefit from copper prices returning to the levels where incentive pricing needs to exist to build new mines.

In essence, copper has to return to the $3.25/lb to $3.50/lb levels and one should value the stock based on these fundamental realities over the long run. In this case, Freeport-McMoRan is positioned to generate $8+ billion in EBITDA and $6+ billion in operating cash flows each year.

Source: Jefferies Metals Summit presentation

 

The company is in a major transition period at the Gasberg mine in Indonesia so current production levels are down from previous normal levels from 2018 and projected levels in 2021. Freeport-McMoRan has an enterprise value in the $20 billion range, placing the stock at 2.5x EBITDA and 3.3x operating cash flows. The stock is incredibly cheap by either metric.

The stock could struggle at $10 for an extended period with operating cash flows for 2019 forecast below the current full-year capex spend of ~$2.6 billion. With this target set at average copper prices of $2.75/lb and copper now below these levels, the market isn’t likely going to respond great to lower reported cash flows.

Takeaway

The key investor takeaway is that the market might struggle to reward Freeport-McMoRan with a reasonable stock price due to the time between now and the start of 2021. Regardless, investors should look at building positions when the stock is below $10 as one looks to ride the stock higher with both higher copper prices and increased production.


Source: https://seekingalpha.com/article/4294217-freeport-mcmoran-lose-faith

Weekly News

PT Timah Net Profit Hikes 20.65% in 1H


PT Timah Tbk (TINS) posted Rp 9.65 trillion in revenue in the first half of 2019, up 120.54% year on year (yoy) from Rp 4.37 trillion in 1H-2018.

Based on the company’s financial statements as of June 30, 2019, Timah’s operating revenue was driven by sales of tins and soldering iron that soared 127.73% from Rp 3.91 trillion to Rp 8.9 trillion.

In addition, Timah also recorded revenues from shipyard services at Rp 287.7 billion, tin chemicals Rp 195.84 billion, hospitals Rp 133.22 billion, nickel Rp 41.37 billion, real estate Rp 57.97 billion, and spare parts Rp 28.06 billion. Export sales were recorded at Rp 8.72 trillion while local sales amounted to Rp 182.95 billion.

The company’s cost of revenue also surged from Rp 3.7 trillion in 1H-2018 to Rp 8.83 trillion in 1H-2019, which brought its gross profit to grow 21.14% from Rp 674.84 billion to Rp 817.52 billion. In total, Timah’s recurring profit was recorded at Rp 205.37 billion in 1H-2019, up 20.7% yoy from Rp 170.14 billion.


Source: https://www.idnfinancials.com/news/29005/timah-profit-hikes-h

Weekly News

United Tractors to Distribute Interim Dividend of Rp 408 Per Share


PT United Tractors Tbk (UNTR) will distribute an interim dividend for 2019 fiscal year of Rp 408 per share, equivalent to Rp 1.52 trillion. Distribution of dividends will be conducted on October 23.

This value is equivalent to 27.28% of the total net profit of the company in the first semester of 2019 amounting to Rp 5.57 trillion.

For information, UNTR’s interim dividend in 2018 was Rp 365 per share. Then, back in 2017 and 2016 it was Rp 282 and Rp 143 per share, respectively.

For information, interim dividends on the regular market and negotiations will be carried out on October 7, ex interim dividends on the regular market and negotiations on October 8. Cum interim dividends on the cash market on October 9 and ex interim dividends on the cash market on October 10. The recording date is on 9 October and the payment will be made on 23 October.


Source: https://www.idnfinancials.com/news/29025/united-tractors-distribute-interim-dividend-share

Weekly News

Coal is Still King in Southeast Asia’s Power Market


According to a new report by Wood Mackenzie, coal will continue to be the dominant fuel source in power generation, peaking at 2027 before slowing down and accounting for 36% of the region’s generation mix in 2040.

By then, total power demand in Southeast Asia is expected to double from 1.05 petawatts per hour (PWh) in 2018 to 2.46 PWh.

To meet the rapidly increasing power demand, Southeast Asia will have to invest an average of US$17 billion annually in power capacity. Coal should account for most of this investment in the medium term, before being overtaken by spending on gas-fired generation. By 2034, investments in solar and wind power plants should surpass that of gas power plants.

“The narrative surrounding coal has been pessimistic across the world. This will result in the gradual slowdown of new coal-fired capacity in Southeast Asia. However, the reality of rising power demand and affordability issues in the region mean that we will only start to see coal’s declining power post 2030,” said Jacqueline Tao, Research Associate, Wood Mackenzie.

Incremental coal will decline over time as the cost of renewables decreases and pressure on environmental grounds increases. By 2040, solar and wind power plants will lead in the region’s power capacity mix at 35% or 205 gigawatts (GW).

“Collectively, investments in wind and solar power supply makes up 23% of total power investment, amounting for more than US$89 billion from 2019 to 2040. This is despite renewables being less cost competitive in the region compared to the rest of the world, and challenges such as land acquisition and intermittency issues,” Tao added.

Often touted as a transition fuel, the percentage of gas in the region’s power mix should remain flat at about 30% through to 2040. Southeast Asian total gas demand will grow from 14 billion cubic feet per day (bcfd) today to more than 23 bcfd by 2040, supported by the continued infrastructure expansions in Thailand, Vietnam and Indonesia.

Tao said: “Driven by strong economic growth, burgeoning population and developing middle-class, power demand in Indonesia and Vietnam, could rise three-fold to 1.44 PWh in 2040. Together, these two markets will account for almost 60% of Southeast Asia’s power demand.”

While gas demand continues to grow, the outlook of gas supply in the region remains largely constrained as many of the mature fields are going into decline. The first half of 2019 saw three large gas discoveries in the region, which may lead to a revival of exploration interest and CAPEX spend in the region. However, it is unlikely to arrest the decline from mature fields.

Southeast Asian countries are expected to import more than 100 million tons per annum (mmtpa) of LNG by 2036. This represents almost a 10-fold increase from the 10-mmtpa imports in 2018. Substantial investments in regasification infrastructure will be required to enable this volume of LNG to enter Southeast Asian markets.


Source: https://www.hellenicshippingnews.com/coal-is-still-king-in-southeast-asias-power-market/

Weekly News

Indonesia Secures Finance for Geothermal Energy


The World Bank’s board of executive directors has approved a $150m loan for Indonesia to scale up investments in geothermal energy by reducing the risks of early-stage exploration.

The loan is accompanied by $127.5m in grants from the Green Climate Fund and the Clean Technology Fund, two institutions supporting climate-friendly development.

Geothermal energy is expected to play a significant role in reducing Indonesia’s greenhouse gas emissions. As a clean energy source that provides power continuously, geothermal can reduce the country’s dependence on coal-fired power and other fossil fuels. If geothermal resources can be accessed easily, costs are competitive with coal and natural gas.

Sri Mulyani Indrawati, minister of finance of the Republic of Indonesia, commented: “Indonesia’s geothermal sector has vast potential and our current installed geothermal power capacity is already the second largest in the world.

“Geothermal is environmentally sustainable and developing this sector is an integral part of Indonesia’s overall energy security, as well as making us less dependent on imported fuels.

“Therefore, the government of Indonesia has a strong commitment to encourage developers’ participation in exploring the geothermal potential and to provide support through this risk mitigation facility.”

Under the Indonesia Geothermal Resource Risk Mitigation (GREM) project, the financing will help public and private sector developers to mitigate risks in exploration of geothermal resources, including covering a part of the cost in case of unsuccessful exploration. The project will also finance technical assistance and capacity building of key stakeholders in the geothermal sector.

“To achieve the government’s target of 23 per cent renewable energy mix by 2025 requires contributions from geothermal development of about 7 per cent or equal to 7,000 MW. It is an ambitious and huge development with a total investment of $35 billion,” said FX Sutijastoto, director general of new, renewable energy, and energy conservation, of the Ministry of Energy and Mineral Resources.

Sutijastoto further noted: “Geothermal projects are risky investments especially at the exploration stage, and no financial institutions provide funding for this early stage. We are happy to welcome the GREM facility, dedicated to finance exploration activities and provides a risk-sharing instrument. The project would help answer a big challenge in exploration financing and contribute to the success of Indonesia’s geothermal development.”

The cost of exploration drilling is relatively small compared to the total cost of developing geothermal power. However, it is the riskiest phase and finding this initial capital has proven to be challenging for developers since they may not recover the cost if the drilling reveals that the geothermal resource is not economically viable.

Indonesia is currently a net importer of oil and continues to rely heavily on fossil fuels for power generation. Of the total installed national power capacity, 88 per cent is sourced from fossil fuels while 12 per cent comes from renewable energy.

Indonesia now has 1.9 GW of installed geothermal power and plans to develop an additional 4.6 GW to help meet the government’s target of renewable energy.

Rodrigo A. Chaves, World Bank country director for Indonesia and Timor-Leste, explained: “Financing for exploration drilling has been among the main barriers for geothermal expansion in Indonesia. Overcoming this hurdle will allow Indonesia to fully tap into the country’s large geothermal potential. “The World Bank is committed to helping Indonesia achieve universal access to electricity as for a cornerstone for economic growth, job creation, and prosperity for the citizens of Indonesia.”


Source: https://www.powerengineeringint.com/2019/09/30/indonesia-secures-finance-for-geothermal-energy/?topic=44272

Weekly News

ESDM to Rethink Renewables Strategy Amid Lower-Than-Expected Economic Growth


Indonesia must restrategize to meet its 2025 renewable target, the Energy and Mineral Resources (ESDM) Ministry said on Sept. 25 at a discussion on the country’s renewable energy outlook in Jakarta.

“So what is our strategy to reach that target? With the implementation of the [30 percent] B30 biodiesel policy, we expect to increase the renewable energy mix by 3 percentage points,” ESDM geothermal director Ida Nuryatin Finahari said during the discussion.

The ministry would also increase output at biomass power plants by 5 percentage points and the production of biogasoline and bioavtur by 2 percentage points each to meet the 23 percent target, she said.

The ministry has decided that it would focus more on developing bioenergy over other alternatives in meeting the government’s 23 percent renewable energy target, as stipulated in the long-term National Energy Plan (RUEN). This was particularly because bioenergy aligned with the government’s plan to promote biofuel consumption in the transportation sector and thus, reduce carbon emissions and oil imports.

The decision came after the Agency for the Assessment and Application of Technology (BPPT) released its Energy Outlook 2018 late last year, which concluded that Indonesia would reach a new and renewable energy (NRE) mix of only 13 percent by 2025, much lower than the target.

It reported that, despite continual increase, the country’s renewable energy development could still not compete with fossil fuels and thus, “the target for NRE usage set by the Government […] will be difficult to achieve”.

“When we were drafting the RUEN, we were very optimistic about Indonesia’s economic growth, expecting 7-8 percent growth, but our current growth is only around 5 percent,” said Ida, explaining that the government had overestimated its growth projection for renewable energy production.

The BPPT’s Energy Outlook 2018 arrived at its 13 percent NRE growth projection by assuming consistent economic growth of 5 percent.

President Joko “Jokowi” Widodo announced in August that the government was bringing forward the implementation of its B30 policy to January 2020, and that state-owned energy holding company Pertamina was conducting a production trial run (PTR) of palm oil biodiesel at its Plaju refinery in South Sumatra.

However, three renewable energy experts The Jakarta Post interviewed agreed that biofuels alone would not be enough to meet the government’s 23 percent NRE target.

“To reach the [national] energy target, renewable energy development should involve biofuel to power vehicles, as well as renewable power plants such as geothermal, hydroelectric, nuclear, solar and wind,” said BPPT head Hammam Riza.

Hamman also noted that biofuels were a particularly lucrative energy source because the price of palm oil – a common biofuel ingredient – had been declining since the European Union (EU) decided to phase out palm oil imports.

Diversifying renewable energy sources was also necessary, as the production of palm oil biodiesel was frequently criticized for causing severe deforestation, which could offset the RUEN’s other target to reduce Indonesia’s greenhouse gas emissions by 29 percent by 2030.

Separately, Indonesian Renewable Energy Society (METI) chairman Surya Darma concurred with Hammam’s views, although Surya had reservations about nuclear power.

Energy analyst and Indonesian Geothermal Association advisor Abadi Poernomo said that the RUEN also projected that 65 percent of the 92 million tons of oil equivalent (mtoe) in renewable energy consumption projected for 2025 would be consumed as electricity, while only 32 percent would be biofuel.

“This means that the 23 percent renewable energy target is not achievable with just biofuel,” he said.


Source: https://www.thejakartapost.com/news/2019/10/02/esdm-to-rethink-renewables-strategy-amid-lower-than-expected-economic-growth.html

Weekly News

Resource Nationalism Takes Hold of Indonesian Coal


When House of Representatives Speaker Bambang Soesatyo finally bowed to President Joko Widodo’s request to leave four crucial pieces of legislation to the next parliament, not all of the outgoing lawmakers leapt to his command.

Under pressure from heavy hitters in the country’s US$32 billion coal industry, the parliamentary mining commission was still scheduling meetings days later, vainly trying to find a way to get the newly revised Mining Law through a plenary session of the outgoing House.

The crux of the matter is a new amendment to the 2009 Mining Law which will lift the 15,000 hectare restriction on the size of coal miners’ concessions when they are compelled to convert their expiring Coal Contracts of Work (CCoW) to new Special Business Licenses (IUPK).

“The commission members had to prove to the coal lobbyists they were doing everything possible to get it done, even if they did appear to be defying Jokowi (Widodo),” says one industry source familiar with day-to-day developments.

Although chaired by Gus Irawan Pasaribu, an opposition Great Indonesia Movement Party (Gerindra) lawmaker, 25 of the commission’s 41 members belonged to Widodo’s ruling coalition, including eight from Widodo’s Indonesian Democratic Party for Struggle (PDI-P).

They will soon be replaced by an entirely different line-up now that a new parliament has been installed. “It’s going to be a whole new ball game,” says one outgoing commission member. “There will be a whole lot of new interests involved. We have no idea what the new commission will do. It might even start all over again.”

Underlying the property restriction is a concerted move by the State Enterprise Ministry to take over the balance of concessions, currently operated by some of the largest private sector coal firms, which unlike foreign miners wield considerable political influence.

Over the past year, Energy and Mineral Resources Minister Ignasius Jonan, who could be replaced in the next Cabinet reshuffle, has called in coal producers one-by-one to urge them to relinquish parts of their concessions, in one case by as much as 72,000 hectares.

“There is clear evidence of an ongoing struggle between the public sector and the private sector for the control of the Indonesian coal industry,” says lawyer Bill Sullivan, who specializes in mining issues. “This is very much a battle of the giants, and it’s not clear who the winner will be.”

Coupled with ongoing global economic issues and the move away from coal to renewable energy sources, the lack of legal certainty has hard hit the industry, with companies finding it difficult to raise finance and interest potential investors.

Last March, State Enterprise Minister Rini Soemarno returned the proposed Mining Law amendment to the State Secretariat, challenging the lifting of the 15,000 ha restriction and seeking additional regulations that will give SOEs priority in taking over expiring contracts.

In an accompanying letter, she reminded the government that the country’s natural resources, including minerals and coal, belong to the state “and their commercialization must be optimized for the people’s prosperity and well-being.”

Soemarno’s job may also be on the line when the new Cabinet is announced later this month, but in the meantime she is holding tough. “State-owned companies, as an extension of the state, require a greater role in representing state control over natural resources,” she said.

State-run PT Bukit Asam is Indonesia’s seventh biggest coal company with seven subsidiaries covering 87,000 ha, in South and West Sumatra and East Kalimantan. It is currently developing a series of mine-mouth power plants to connect to the newly integrated Sumatran power grid.

Soemarno insisted in the letter that policies are needed to support the role of SOEs in downstream processing, part of a wider government effort to add value to the country’s coal and other minerals, and help boost foreign exchange reserves.

Industry sources say mining magnate Aburizal Bakrie, owner of Bumi Resources, the country’s largest producer of thermal coal, and his protege, Andi Syamsuddin Arsyad, a former motorcycle taxi driver, have been leading the charge to get the bill passed in its current form.

Kalimantan mine owner Kiki Barki, owner of PT Tanito Harum, whose CCOC was surprisingly extended by the minister of energy and mineral resources earlier this year, then revoked when the Anti-Corruption Commission (KPK) questioned its legality, is also at the forefront of the fight.

According to reports, the KPK wrote directly to Widodo in June asking him to cancel Tanito Haram’s IUPK – a clear sign that it saw the potential risk of a financial loss to the state, which the Attorney General’s Office often uses as grounds for a corruption charge even when personal enrichment is not involved.

Although the KPK has generally steered clear of such cases, Widodo supported the revisions to the new law seeking more oversight of the commission because he believes its uncompromising war on corruption is inhibiting bureaucrats from making timely business-related decisions and thus contributing to slowing economic growth.

Between now and 2025, seven other so-called “generation one” contracts are due to expire, including Kalimantan-based PT Arutmin and PT Kaltim Prima Coal, both of which fall under the umbrella of Bumi Resources, whose concessions are up in 2020 and 2021.

Between them, Kaltim Prime and Arutmin have a total concession area of 147,000 hectares across South and East Kalimantan, producing about 60 million tons of coal a year and with export markets across India, China and nine other Asian countries.

Other contracts due to run their course over the same period are PT Adaro Indonesia (2021), PT Kendilo Coal Indonesia (2021), PT Multi Harapan Utama (2022), PT Kindeco Jaya Agung (2023) and PT Berau Coal Tbk (2025), all owned by politically connected figures who stand to see their holdings diminished.

Mine owners don’t want to be put in the same position as US mining giant Freeport, which was forced to relinquish a controlling interest in its profitable Grasberg copper and gold mine in Papua to state-owned holding company Inalum in exchange for a contract extension.

Coal firms invariably belong to Indonesian businessmen because they are open-pit excavations with little of the expensive processing and general expertise needed for the exploitation of minerals, particularly in complex underground operations like at Grasberg.

Resource nationalization has also continued apace in the oil and gas sector, with state-owned PT Pertamina taking over the Mahakam gas block from French firm Total in late 2017. The state energy firm is now preparing to assume control of Chevron’s Rokan block, Indonesia’s biggest oil field.

Both, however, are maturing fields and Pertamina is already fighting a losing battle to maintain production at the Mahakam field, off the east coast of Kalimantan, because of a shortage of finance to drill the required number of wells each year.


Source: https://www.asiatimes.com/2019/10/article/resource-nationalism-takes-hold-of-indonesian-coal/

Weekly News

Antam's Net Profit Rose by 6% to Rp 365.75 Billion


PT Aneka Tambang Tbk (Antam) announced that it managed to generate Rp 365.75 billion in net profit in the first half (1H) of 2019, 6% higher than its net profit in 1H 2018 of Rp 344.45 billion.

“The growth in production performance and sales of Antam’s main commodities is reflected in the achievement of total net sales of Rp14.43 trillion, 22% higher than the achievement of the previous period,” said Finance Director of Antam, Dimas Wikan Pramudhito, in his statement on Tuesday (01/10/2019).

Antam’s solid financial performance is also reflected in the growth its Earning Before Interest, Taxes, Depreciation and Amortization (EBITDA) which grew by 6% from Rp 1.38 trillion in 1H 2018 to Rp 1.46 trillion.

Gold contributed Rp 9.61 trillion of the company’s total net sales in 1H 2018, 67% of the company’s total net sales.

Antam’s solid financial performance is also reflected in Antam’s corporate credit rating given by S&P Global, which improved from a ‘B- / positive outlook’ to a ‘B / positive outlook’. In addition, the company’s corporate rating and the rating of its Shelf Registration Bonds I/2011 given by PT Pemeringkat Efek Indonesia (PEFINDO) also improved from ‘idA- / stable outlook’ to ‘idA / stable outlook’.


Source: https://www.idnfinancials.com/news/29033/antam-profit-rose

Weekly News

Coal Entrepreneurs Ask the Government to Prioritize Minerba Law


The Indonesian Coal Mining Association (APBI) wants the government to immediately prioritize the draft of Minerals and Coal (Minerba) Law which was delayed.

“Because investment certainty is needed,” said Hendra Sinadia, Executive Director of APBI, as quoted by Kontan on Tuesday (1/10) yesterday.

In line with APBI, the Indonesian Young Entrepreneurs Association (HIPMI) also supported that the law should be discussed immediately. In addition, the discussion must also involve entrepreneurs engaged in the Minerba sector.

Mardani H Maming, Chair of HIPMI, explained that the House of Representatives (DPR) must be responsive in responding to the challenges in the Minerba industry. “We will oversee that this law can be passed immediately in order to increase the birth of new business actors in Indonesia,” said Maming.


Source: https://www.idnfinancials.com/news/29055/coal-entrepreneurs-government-prioritize-minerba-law

Weekly News

Coal Contracts in Limbo


Only an inept government would allow the legal status of an industry that is vital to national power generation and contributes significantly to tax revenue to remain in limbo.But imbroglio is truly the biggest problem that seven major coal mining companies are now facing after deliberations on the amendment of the 2009 Mining Law were postponed.

President Joko “Jokowi” Widodo openly expressed outrage upon learning from a World Bank report early September that Indonesia was one of the least attractive countries in ASEAN for foreign direct investment.

But legal uncertainty, as currently encountered by coal mining companies, is one of the main barriers to investment. Discouragingly, too, the President only has himself to blame for allowing such imbroglio.

The long delay in the enactment of new regulatory guidelines for the extension of coal mining contracts of work (CoWs) of the first generation in Kalimantan had resulted in one major coal producer stopping production when its contract ended.

Worse still, the previous House of Representatives failed to complete the Mining Law amendment by the end of its term on Monday. Hence, there is currently no regulatory guidance whatsoever for contract extensions.

Six other major coal companies with contracts that will expire within the next three years have virtually stopped new investment over uncertainty in their contract extensions.

Despite all pledges to develop renewable energy, the big concern is that these coal firms supply about 70 percent of the needs of state-owned electricity company PLN, which derives 40 percent of its power production from coal-fired plants.

Given such an emergency, it is crucial that the newly installed House makes the bill on the 2009 Mining Law amendment a top priority in its National Legislation Program during its current session period.

Since the amendment covers not only coal but also other mining businesses outside oil and gas, the political process for the new Mining Law could take a few months.

But whatever amendment is made, it is imperative that the new law maintains provisions in the current law on coal mining, which requires the return to the government of all coal concessions with expiring CoWs and gives state-owned enterprises the right of first refusal for relinquished coal concessions. These provisions are crucial to give the government tighter control of the coal industry.

Stipulations in the current law that restrict the size of a coal concession to a maximum of 15,000 hectares should also be maintained because the size of coal mining concessions awarded before the 2009 law was unlimited. Some of the first generation coal mining contracts, which will end within the next two to three years, even cover hundreds of thousands of hectares.

Time is of the essence for the enactment of a new law because coal mining, like other mining businesses, requires a big investment and mining firms need certainty about the legal status of their contracts at least five years prior to their expiry before they can make new investment decisions.


Source: https://www.thejakartapost.com/news/2019/10/04/coal-contracts-limbo.html

Weekly News

Black & Veach to Manage Refinery Build for PT Borneo Alumina in Indonesia


PT Borneo Alumina Indonesia has appointed a Black & Veatch-led project management consortium (PMC) to develop an alumina refinery in West Kalimantan.

The facility, the first of its kind in Indonesia, according to Black & Veatch, will feature a 1 Mt/y smelter-grade alumina refinery, a 2 x 40,000 cu.m/h coal gasification plant and a 3 x 25 MW coal-fired power plant.

As the consortium leader, Black & Veatch will perform design review, equipment inspections, and provide power and coal gasification subject matter expertise. Consortium partner Progesys will be managing the alumina refinery process design scope, while another partner, Jaya CM, will be supporting the project with site construction engineers and inspectors.

Progesys is a minerals industry engineering company based in Canada, while Jaya CM is an Indonesia-based construction management company.

“As the project consultant, the consortium is responsible for evaluating engineering, procurement and construction bids and reviewing design engineering,” Black & Veatch said. The consortium will monitor major equipment supply and conduct factory acceptance tests. It will also oversee site construction and commissioning.

Jim Spenceley, Senior Vice President, Mining, Black & Veatch, said developing the downstream mineral processing industry will expand the Indonesia economy and create jobs. “Black & Veatch is ready to leverage our global expertise across business units to support as PMC overseeing our client’s Chinese engineering, procurement and construction contractor to ensure that the client realises the quality, safety and value they are seeking.”

Black & Veatch’s knowledge of international and country-specific engineering codes and standards, and contract structures systematically mitigates project cost and schedule risks, according to the company. “By serving as the interface between different engineering standards, Black & Veatch offers clients assurance that EPC contractors deliver on specific project commitments cost effectively.”


Source: https://im-mining.com/2019/10/03/black-veach-manage-refinery-build-pt-borneo-alumina-indonesia/

Weekly News

Indonesia Makes Concerted Efforts to Curb Coal Usage


Environment and Forestry Minister Siti Nurbaya Bakar acknowledged she had coordinated with Energy and Mineral Resources (ESDM) Minister Ignasius Jonan on Indonesia’s efforts to curtail the use of coal for electricity.

“I have spoken with Minister Ignasius Jonan on the efforts to reduce the amount of coal used in Indonesia,” Minister Bakar remarked here on Wednesday.

However, taking into account Indonesia’s growing economy, she admitted that the Ministry of Energy and Mineral Resources had yet to commit to realizing complete elimination of coal energy use.

Coal energy use is one of the challenges facing the global community in addressing the impact of climate change.

“The international community is currently working hard and paying more attention to reducing the use of certain forms of energy, such as coal,” she remarked.

Almost all countries worldwide have agreed to lower 80 percent of the coal energy use, while some nations have also committed to totally eliminating the use of coal in a bid to fight climate change until 2050.

The issue of climate change has been one of international concern since the 1950s. However, efforts made to deal with climate change during that time were more focused on deforestation and not yet on lowering the use of fossil energy sources.

Minister Bakar admitted that in Indonesia, the problems of deforestation and air pollution arising from vehicles and factories had hindered efforts to tackle climate change.

Nonetheless, the government claimed to have endeavored to lower the impacts of climate change, including by handling forest and land fires as well as by maintaining peatlands.

Furthermore, the government has prioritized mangrove planting to fight climate change in accordance with the commitment in the Paris Agreement.


Source: https://en.antaranews.com/news/133990/indonesia-makes-concerted-efforts-to-curb-coal-usage

Weekly News

Indonesia’s Largest Power Plant on Schedule to Operate Next Year


A 2,000-megawatt coal-fired power plant tipped as the largest project of its kind in Southeast Asia is on track to kick off commercial operations next year

“Right now, the Batang power plant has been 83 percent completed. It is on track to begin commercial operations in 2020,” said Dharma Djojonegoro, vice president of Adaro Power, a subsidiary of Adaro Energy.

Coal producer Adaro Energy, which will supply the coal needs of the power plant, owns 34 percent of the plant through joint venture firm Bhimasena Power Indonesia (BPI).

The coal producer, which is Indonesia’s second-largest after Bumi Resources, is slated to supply up to 7.5 million tons of coal to the plant each year, which would equal to 13.8 percent of the 54 million tons of coal produced last year by Adaro Energy.

The Batang power plant, which BPI has been working on since 2011, was initially scheduled for completion by 2016, but land-related disputes between BPI and local residents delayed construction until the Supreme Court issued in 2016 a ruling in favor of BPI.

Construction has been on track ever since, reaching 30 percent completion in 2017 and 60 percent last year.

“Most of the plant is done. The machines are in place. Only the little bits are left, such as little pipe works,” said the Energy and Mineral Resources Ministry’s electricity directorate general secretary, Munir Ahmad, on Sept. 26

The US$4.2 billion power plant, whose remaining shares are owned by Japanese utility firm J-Power (34 percent) and general trader Itochu Corporation (32 percent), is Indonesia’s largest public-private partnership project to date.

BPI injected 20 percent of the total investment while 48 percent came from the Japan Bank for International Cooperation (JBIC) and 32 percent from a syndicate of nine Japanese banks.

Meanwhile, PLN is slated to become the plant’s buyer until the existing power purchase agreement (PPA) expires in 2045.

However, according to a leaked Finance Ministry letter dated September 2017, PLN is facing liquidity problems because sales will be insufficient to purchase the electricity produced by independent power producers (IPPs).

PLN spokesman Dwi Suryo Abdullah said the company’s main strategy to improve sales was by incentivizing customers, particularly those on Java Island, to switch from fossil fuel-powered stoves, motorcycles and cars to those powered by electricity.

“To boost growth, the key is, of course, pushing PLN electricity sales,” he said. “We can see that Java’s electricity consumption is growing at a high [rate], reaching 4 to 5 percent annually.”

PLN’s revenue in the first half rose 4.95 percent year-on-year to Rp 133.45 trillion ($9.38 billion), which aligns with a 4.41 percent increase in electricity consumption to 118.52 terawatt hour in the same period.

“In relation to electricity sales, under the take-or-pay scheme, BPI is committed to providing electricity as requested and needed by PLN,” Dharma said.

BPI’s publicly available environmental impact assessment, conducted in 2016 by American engineering consultancy POWER Engineers, says the air around the plant has a sulfur dioxide ( SO2 ) concentration of 25 micrograms per cubic meter (µg/m3) and particulate concentration of 116 µg/m3.

Air quality around the plant complies with Central Java Gubernatorial Decision No. 8/2001 on ambient air quality.

The assessment also projected operational carbon dioxide emissions of 12.6 million metric tons each year but did not project operational SO2 and particulate emissions, which should be, respectively, below 200 milligrams per cubic meter (mg/m3) and 50 mg/m3, as mandated by Environment and Forestry Ministry Regulation No. 15/2019 on emission standards for thermal power plants.


Source: https://www.thejakartapost.com/news/2019/10/04/indonesia-s-largest-power-plant-schedule-operate-next-year.html

Weekly News

Environment Ministry to Exempt Nickel Slag from 'Hazardous' Status


The Environment and Forestry Ministry is preparing a regulation to exclude nickel slag produced by local mineral smelters from the list of hazardous and toxic waste ( B3 ) so that it can be used, such as for the construction of roads.

The ministry’s waste management director general Rosa Vivien Ratnawati said that nickel slag did not meet the definition of B3 waste, as it is nonflammable, noncombustible, noninfectious and noncorrosive.

“However, we consider nickel slag to be B3 waste because it has potential cumulative side effects as it is usually produced in a large quantity,” she said after a meeting at the Office of the Coordinating Economic Minister on Friday last week.

The meeting discussed the utilization of the nickel slag for economic purposes, such as for the construction of roads.

The Industry Ministry estimated that 20 million tons of nickel slag is currently produced every year. More would be produced in the coming years when all nickel smelters currently under construction begin operating.

Indonesia has 11 nickel smelters and is constructing another 25.

Rosa said that Government Regulation No. 101/2014 has regulated the exception of the nickel slag as hazardous waste and that the ministry was preparing to issue a regulation for the exception procedures for nickel slag.

“Smelters must request the exception and their nickel waste must pass the LD50 (lethal dose 50) test, the Toxicity Characteristic Leaching Procedure (TCLP) and the subchronic toxicity test first,” she told the press.

She said the ministry had initiated evaluations on nickel slag produced by three smelters, namely PT Vale Indonesia Tbk, PT Indonesia Morowali Industrial Park (IMIP) and PT Aneka Tambang (Antam) Pomalaa, Southeast Sulawesi branch.

Meanwhile, Coordinating Economic Minister Darmin Nasution said the exception was long overdue, explaining that other countries did not consider nickel waste to be hazardous.

“They make nickel slag into concrete and asphalt, but in Indonesia the process for exception is difficult,” he said.

Darmin suggested that the government regulation be revised to exclude nickel slag as B3 waste until proven otherwise by lab tests.

The government had pushed for the construction of mineral smelters as part of the program to develop the country’s downstream mining industry.


Source: https://www.thejakartapost.com/news/2019/10/01/environment-ministry-to-exempt-nickel-slag-from-hazardous-status.html

Weekly News

PT Timah Reduces Tin Exports to Raise Prices


State-owned tin mining company PT Timah Tbk reduced its exports by 2,000 to 2,500 tons per month looking to raise the declining tin prices on the global market which has affected the national tin producer. “We have indeed reduced our overseas sales as a response to the decline of tin prices,” President Director of PT Timah Tbk, Mochtar Riza Pahlevi, said here Friday.

Export reduction by 1,000 up to 1,500 tons per month has been carried out since July 2019, Pahlevi stated. Currently, PT Timah will increase its export cuts by around 1,000 tons per month, bringing the total reduction in exports between 2,000 and 2,500 tons per month.

“The current tin price is not yet favorable to us, especially considering what we have done as a mining company,” he said.

PT Timah Tbk, as one of the world’s tin producers, has implemented a good and responsible mining system, he further said.

“This company has fulfilled all of its responsibilities regarding environmental issues, reclamation, business and human rights as well as community empowerment, starting from exploration to post-mining process,” Pahlevi explained.

“This is not to mention the mining sector which in its operations has various risks,” he said.

Secretary General of the Indonesian Tin Exporters Association (AETI), Jabin Sufianto supported PT Timah Tbk’s plan to reduce its tin production and exports.

The reduced production will impact the tin prices, given Indonesia’s enormous role in meeting the demand of tin in the global market, Sufianto argued.

“AETI supports this plan. We must indeed be brave to reduce production volumes while the price is still at a low level,” he said.


Source: https://en.antaranews.com/news/134140/pt-timah-reduces-tin-exports-to-raise-prices

Weekly News

India Seaborne Thermal Coal Demand Up After Major Domestic Mine Flooded: Sources


Severe flooding at one of Coal India’ largest mines has pushed up demand for imported thermal coal, market sources said Friday.

The flooding at Dipka mine, in Central India, was caused by heavy rain and hit affected coal output, they said.
Details of how much production was affected were not immediately known. Coal India was not available for comment.

The mine produces over 30 million mt a year of thermal coal, and the flooding could lead to fuel shortage at some power plants in eastern and central India, according to local media reports.

A Singapore-based trader said it would mean a slight uptick in Indian import demand.

An Indonesia-based trader also heard pockets of Indian restocking because of heavy monsoon rains causing flooding in Northern India.

“This could offer some support to seaborne prices,” he said.

“Heavy rains have been slowing down production,” an India-based trader said.

Another Singapore-based trader added that demand from India would likely be boosted as domestic power utilities might issue tenders for seaborne thermal coal in coming weeks.

“I expect the market to be up a bit next week, with both India and China back in the market,” he added.

S&P Global Platts assessed the price of Indonesian 4,200 kcal/kg GAR – or 3,800 kcal/kg NAR- coal at $33.50/mt FOB Kalimantan on a Supramax vessel basis Friday, up 50 cents on the day and 40 cents on the week. This was $1.50/mt higher on the month.


Source: https://www.spglobal.com/platts/en/market-insights/latest-news/coal/100419-india-seaborne-thermal-coal-demand-up-after-major-domestic-mine-flooded-sources

Mining People on The Move

Kingrose Mining Limited - Grant Mills


Non-executive Director Resigns

Kingsrose Mining (ASX: KRM, “Kingsrose” or “the Company”) announces that Grant Mills has submitted his resignation as a Director of the Company, effective as of 30 November 2019 and that the Company has accepted his resignation.

Mr Mills, who has been a Director of Kingsrose since August 2017, plans to focus on development of his various personal business interests.

Interim Chairman Dr Mike Andrews thanked Mr Mills for his dedication to the Company and his assistance in implementing the operational strategy.

“During his tenure on our Board Grant has fulfilled the role of non-executive director with great professionalism and diligence. On Behalf of the Board, I wish Grant all the best with his future business endeavours,” Dr Andrews said.

Kingsrose intend to appoint a new Director in due course.


Source: https://www.kingsrosemining.com.au/announcements/non-executive-director-resignation/

Mining People on The Move

Nusantara Resources Limited - Neil Whitaker


Asia‐Pacific gold development company Nusantara Resources Limited (‘Nusantara’, ASX: NUS) is pleased to announce the appointment of Mr Neil Whitaker as its new Chief Executive Officer with effect from 26 August 2019.

Nusantara is an ASX-listed gold development company with its flagship Awak Mas Gold Project located in South Sulawesi – Indonesia. The Company is engaged in financing discussions with the intent of moving the projected 100,000 ounce per year1 project into development in 2020.

Neil has over 40 years’ experience in the mining sector and has held operating and senior executive roles with companies such as Anglo American, Western Mining Corporation, Clough Indonesia (Petrosea Tbk) and Newcrest Mining. Neil has extensive international operating experience with a demonstrated background in leading resource companies through the transitional stages of the full project life cycle. Having previously worked in the Asia-Pacific region and more specifically as the Chief Operating Officer for PT Petrosea Tbk (a subsidiary of our Indonesian strategic partner), Neil has relevant experience which will place him in good stead to drive the Awak Mas Gold Project into the next phase towards development.

The role is Jakarta based and we anticipate that the established associations which Neil holds with the Indonesian community and senior government officials, will further strengthen our existing relationships as we look to build a successful and highly regarded operating business.

Executive Chairman, Greg Foulis, will continue in the Executive Chairman role for a short period as Neil establishes himself with the Company.

Nusantara Resources Limited’s Executive Chairman Greg Foulis said, “We are very pleased to have Neil join the team during this exciting time for the Company. I am confident that his significant experience and relevant Indonesian expertise will enable the business to successfully transition into
development and deliver another world class gold mine in the Asia-Pacific region”.


Source: https://nusantararesources.com/asx-announcements

Mining People on The Move

Cokal Limited - Gerhardus (Garry) Kielenstyn


Cokal Limited (ASX:CKA, “Cokal” or “the Company”) advises that Mr Gerhardus (Garry) Kielenstyn has resigned as an Executive Director of the Company, effective immediately.

Mr Kielenstyn has worked with the Company since May 2013 when he was appointed Indonesian Country Manager. During June 2016 he was appointed to the role of the Company’s Chief Operating Officer and in January 2017 as Executive Director.

Mr Kielenstyn has resigned from the Board to attend to his other business interests and for personal reasons. The Board thanks Mr Kielenstyn for his work over the years, and wishes him all the best for his future endeavours.


Source: http://www.cokal.com.au/wp-content/uploads/2019/08/Director-Resignation.pdf

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