Mitrais, Member of CAC Holdings Group

Mitrais Mining Newsletter

October 2019 | Vol. 43

Weekly News

Indonesia State Miner Agrees to Buy 20% Stake in Vale Indonesia

October 14, 2019

Mining Industry Indonesia, the state miner formerly known as PT Inalum, said on Monday it has signed an initial agreement to buy a 20% stake in nickel miner PT Vale Indonesia (INCO.JK) for an undisclosed sum.

The planned sale was flagged by the Indonesian government last week as Vale Indonesia seeks to comply with rules that require foreign controlled miners to reduce their ownership to 49% or below within 10 years of starting operations.

Vale Indonesia is currently around 59% owned by Brazil’s Vale SA (VALE3.SA) and around 20% by Japan’s Sumitomo Metal Mining Co Ltd.

“The (shareholder) structure is still being discussed, but foreign participation will be reduced to 60% or less,” Rendi Witular, a spokesman for Mining Industry Indonesia, told Reuters by text.

Asked about the sale price, Witular said it would be a “fair market value.”

Vale Indonesia’s share price rose as much as 2.4% after the announcement, to touch 3,920 rupiah, its highest in a month, giving the company a market capitalization of 38 trillion rupiah ($2.69 billion), according to Eikon Refinitiv data.

Mining Industry Indonesia said in a statement that its stake in Vale Indonesia would give it strategic access to the raw material needed to expand Indonesia’s downstream nickel industry.

The Indonesian government is keen to build an holistic onshore electric vehicle (EV) industry, covering everything from the production of nickel chemicals needed for batteries, through to producing those batteries and eventually building vehicles domestically.

Vale Indonesia, which produced 74,806 tonnes of nickel in matte last year and expects to produce 70,000-72,000 tonnes this year, said the deal positions the company to “contribute to the development of Indonesia.”

Mining Industry Indonesia changed its name from PT Inalum in August to distinguish its holding company function from its smelting operational business.


Weekly News

Vale Indonesia's Nine-Month Nickel Matte Output Down 7% year/year

October 14, 2019

PT Vale Indonesia produced 50,531 tonnes of nickel matte between January and September, down 7% from the same period last year, the Indonesian mining company said in a statement on Monday.

Third-quarter output was up nearly 12% output from the second quarter, it said.

“Production in the third quarter was higher than production in second quarter as major maintenance activities have been completed,” CEO Nico Kanter said, adding the company was optimistic it could reach its full-year production target of around 71,000 tonnes of nickel matte.

Earlier this year Vale Indonesia lowered its 2019 output target to 70,000-72,000 tonnes from 74,000 tonnes.


Weekly News

Brazil's Vale, Sumitomo to Reduce Stake in Indonesian Nickel Miner: Filing

October 14, 2019

Brazilian miner Vale SA (VALE3.SA) said in a filing on Monday it has signed an agreement with Japan’s Sumitomo Metal Mining Co (5713.T) and Indonesia’s Asahan Aluminium to reduce its stake in nickel mining company Vale Indonesia.

Complying with an agreement signed in 2014 with the Indonesian government, Vale and Sumitomo will sell a 20% stake to state-owned Asahan Aluminium, known as Inalum. After the deal, Vale and Sumitomo will hold 59% of the nickel mining company. The value was not disclosed.


Weekly News

ASEAN Delegation Amazed With KPC Mining System

October 14, 2019

After the event of the CSR workshop in Balikpapan, Tuesday (1/10), participants from the Ministry of Energy of ASEAN countries visited PT Kaltim Prima Coal (KPC), in Sangatta, Wednesday (2/10).

They want to see first-hand the CSR program and post-mining management at KPC. The participants visited Sangatta Public Hospital, which is one of the KPC programs in the field of public health infrastructure.

After visiting the Public Hospital, participants saw a collaboration program between the Government, State Own Water Company, and KPC in presenting clean water services at the Kudungga Water Treatment Plant.

After that, the group visited the Composing Training Center (CTC) on Jalan Kabo, the Integrated Cow Husbandry Area (PESAT), and finally saw the management of the former mine pit in Telaga Batu Arang (TBA).

Imanuel Manege, General Manager of Health, Safety, Environment and Security (HSES) said, TBA area was once the Surya Pit, one of the KPC mine sites. At present an area of ​​270 hectares with a pond of 12 hectares has become a role model for the management of the former mine.

“In this pond we often hold rowing boat races. And maybe no one thought that this TBA was once a coal mine, because now it is normal again to set aside a beautiful pond with good water quality for drinking water,” said Imanuel.

Hans Kroder, Vice Chair and Director of ISO2600 Global Network Stakeholder (SGN), said he was impressed with the management of the KPC mine. According to him, KPC has done many of the best practices in its mining operations.

“Your company has done a lot of best practices and created mutually beneficial solutions for the community and the environment,” Hans said in his address at the TBA post-mining pond.

In addition, according to Hans, KPC’s mining operations are managed by employees who prioritize conscience and all their abilities to achieve best practices.

“Not by using very sophisticated technology, but using your heart and your intelligence. This makes a cycle and a win-win situation for many stakeholders, “said Hans.

“There is only one negative impact from everything you have done that is about CO2 emissions. But you have also made innovations to capture CO2 emissions and maybe in the future there will be a solution regarding that, “continued Hans.

At the end of his remarks, Hans admitted he was impressed with all the best practices carried out by KPC and the enthusiasm of its employees. “I was impressed with all the best practices that I saw today, as well as the enthusiasm and attention from all people to the community, the environment, and employees. Thank you for showing us all of this. I am much honored to see what you have done, “concluded Hans.


Weekly News

Bumi Confirms Total US$302.2 Million Payment Against Tranche A Principal and Coupon Till Date

October 15, 2019

The Company confirms having processed a seven payment of US$31.8 million by the respective facility agents on 15 October 2019 representing principal of US$23.2 million and interest of US$8.6 million for Tranche A.

With this 7th quarterly payment today, the Company has now paid a total US$302.2 million in cash consisting of Tranche A principal US$191.2 million and interest of US$111.0 million including accrued and back interest.

The next quarterly payment for Tranche A is due on 8 January 2020. PIK Coupons from 11 April 2018 till 15 October 2019 on Tranches B and C are also being capitalized.


Weekly News

PT Bumi Resources Tbk. Wins Best Non-Financial Sector Mid-Cap Listed Company Award at the 2019 IICD Award Ceremony

October 15, 2019

PT Bumi Resources Tbk. (“BUMI” or “Company”) was awarded The Best Listed Company in The NonFinancial Sector Mid-Cap Category. The award was received by the Independent Director & Corporate Secretary of the Company, Dileep Srivastava at “The 11th IICD Corporate Governance Conference & Award 2019 organized by the Indonesian Institute for Corporate Directorship (IICD) at Pullman Hotel Jakarta (10/14) under the theme of Empowering BOC and Its Committees to Ensure GCG Implementation.

The event was also attended by former Indonesian Vice President Boediono, CG Expert IICD James Simanjuntak and IICD Executive Director Vita Diani Satiadhi. Around 46 public companies listed on the Indonesia Stock Exchange (IDX) were selected and divided into two categories, 24 Big Capitalization and 22 Mid-Capitalization based on the ASEAN Corporate Governance Scorecard in assessing the practice of Corporate Governance (CG) of public companies in Indonesia.

Assessments were obtained from sources that have become public information, such as Annual Reports, company websites, press releases/corporate announcements, notice of shareholders meetings, shareholders meeting resolutions, minutes of shareholders meetings, Board Manual / Charter, Code of Conduct / Ethics, Sustainability / CSR report, media coverage, Language: English, and from other easily accessible public information.

This assessment aims to generally socialize the corporate governance performance of public companies in Indonesia and assist the efforts to improve the performance of corporate governance in Indonesia, making it on par with or better than other ASEAN countries.

In addition to promoting good CG practices in Indonesia, this assessment also makes it possible to compare the performance of issuers’ governance practices in Indonesia with five other ASEAN countries.

Mr. Saptari Hoedaja as President Director of PT Bumi Resources Tbk. said “This prestigious top award to BUMI by IICD underscores the highest standards of governance, transparency, and regulatory compliance that BUMI practices – this motivates us to further enhance corporate responsibility and accountability for business success. We are proud to be acknowledged the Best in the Mid Cap NonFinancial sector in Indonesia.”


Weekly News

KPC Won 10 ISDA 2019 Awards

October 15, 2019

PT Kaltim Prima Coal (KPC) once again won awards in the field of Corporate Social Responsibility (CSR). This time KPC won 10 awards on the night of the 2019 Indonesia Sustainable Development Goal’s Award (ISDA), Friday (6/9/2019), at Menara Bidakara, Jakarta.

The award was given by the Corporate Forum for Community Development (CFCD) together with the Ministry of National Development Planning (PPN) / National Development Planning Agency (BAPPENAS).

KPC won 10 awards for its contribution in the field of sustainable development by winning two platinum and 8 gold. Two platinum that were won by KPC from the toddlers under nutrition and malnutrition prevention program as well as the utilization of ex mining pond as source of raw water for Kudungga Water Treatment Plant for Sangatta community.

While the 8 gold awards were obtained from the laying chicken business program, changes in orientation and improvement of the nutritional status and health of pregnant women program, and HIV / AIDS prevention program in KPC environment.

Other programs include the construction of a culture-based school at SDN 013 Keraitan Village, Bengalon, processed giant cassava products, the SMEs empowerment program towards a resilient and independent SMEs, the development of local batik motifs of Wakaroros, and Taman Mulyasari ecotourism in the Kutai National Park.

General Manager of External Affairs and Sustainable Development (GM ESD) Wawan Setiawan expressed his gratitude to BAPENNAS and CFCD for the award given. According to Wawan, the award is not the final goal of the KPC CSR program, but with the award proves that the program made by KPC is in accordance with the goals of sustainable development.

“Thank you to BAPENNAS and CFCD for this award. For us, this is not our goal to create a CSR program, but at least this is an evaluation event that the KPC CSR program is in accordance with the goals of sustainable development, “said Wawan.


Weekly News

Brazilian Company, Vale Indonesia Invests US$5B to Build Smelter

October 15, 2019

Brazilian company joined with nickel miner, PT Vale Indonesia Tbk (IDX: INCO) collaborating build smelter in the country Indonesia with an investment US$5 billion, said the senior official today (10/15). Next, both parties will discuss the composition in the new company.

Vice president director of INCO, Febriany Eddy, said the investment funds will be used to develop two new smelters, and one existing smelter in Bahodopi, Morowali, Central Sulawesi) and Pomalaa, in Kolaka, Southeast Sulawesi.

Beside with Brazil, Vale Indonesia in talks with potential investor from China to build Bahodopi smelter. The discussion on going to decide who’s become the controlling shareholder in the joint venture company, said Eddy.

Bahodopi smelter will have output 700,000 tons per annum. Inline with the smelter development. She added, the company has pocketed exploration permit and now waiting for the exploitation permit and the contract extension.

While, smelter and mines in Pomalaa is estimating need investment $2.8 billion while projects in Bahodopi need costs up to $2.1 billion, including mines. As for expansion in the existing projects, Sorowako mining in East Luwu, South Sulawesi projected need funds $400 million.

“We hope that the permit can be obtained soon,” said the director.

Previously, President Director Vale Indonesia Niko Kanter has announced to invest $5 billion in nickel projects with its partners in the coming years, including $2.5 billion in battery-grade nickel plant projects with Japan’ Sumitomo Metal Mining Co. Ltd and China’ Qingshan Holding Group

INCO and Qingshan have teamed up to build a battery-grade nickel plant in Indonesia at a cost of $700 million with an annual nickel production capacity of 50,000 tons. Construction of the plant began in January and is expected to be completed within 16 to 18 months.

While with China’ Qingshan Holding Group have teamed up to build a battery-grade nickel plant in Indonesia at a cost of $700 million with an annual nickel production capacity of 50,000 tons. Construction of the plant began in January and is expected to be completed within 16 to 18 months.

At the se second quarter of 2019 (2Q), Vale has produced 17,631 metric tons of nickel in matte (t), 35 percent higher than production in 1Q, when planned maintenance activities were completed, said Kanter.

“We are optimistic of meeting our 2019 full year production target of approximately 73,000 t,” he added.

On a year-on-year basis, production in the 2Q of 2019 was about 7 percent lower than production in the same period in 2018. And, the production in 1H of 2019 was 15 percent lower than production in 1H of 201818.

This was basically due to a combination of planned maintenance activities related to the Larona Canal Relining, plant shutdowns and unplanned electric furnace issues in 2019.

Indonesia is rich in nickel deposits, about 3.5 billion wet tons, of which about 60 percent are low-grade laterite nickel deposits, the report said. There are currently six new high-pressure acid leaching (HPAL) plants around the world that can produce 220000 tons of battery-grade nickel a year, 70 percent of which are deployed in Indonesia.

Chinese companies have also seized the opportunity to develop the Indonesian nickel market, the report said.

President Joko Widodo’ government is planning to spend billions of dollars building aluminum and nickel smelters at home as it seeks to reshape the domestic mining industry and curb exports of raw materials while reducing its dependence on imports of finished metals.

This is because Indonesia’ own mining raw materials have been exported for decades, forcing the Southeast Asia biggest economy to rely on costly imports to meet demand.

Indonesia is likely to impose a ban on raw ore exports in 2022, pushing miners to process minerals at home. Under the 2017 mining regulations, Indonesia plans to suspend exports of raw ore on January 12, 2022, after giving miners five years to build smelters in the country.

It is expected that 41 smelters will operate in 2022, including 22 nickel smelters, 6 bauxite smelters, 4 iron ore smelters, 4 zinc smelters, 2 copper smelters, 2 anode slime smelters, and 1 manganese ore smelter.


Weekly News

31 Nickel Smelters to Come on Stream in Indonesia By 2022

October 16, 2019

Indonesian Government aims to build 31 nickel smelters by 2022, with 20 projected to open next year to help the production of electric car components. Head of the mineral exploration business at the Indonesian Ministry of Energy and Mineral Resources Mr Andri Budhiman said at a recent seminar that with many smelters going into operation, there was no concern about the supply of electric car components. Mr Budhiman explained that Indonesia’s proven nickel reserves of 698 million tonnes could only guarantee the supply for refining facilities for 7.3 years. Meanwhile, the country’s estimated nickel reserves stand at 2.8 billion tonnes.

MEMR Regulation No. 4/2009 prescribes that mining companies are required to process and refine raw materials to raise added values. Then, the minimum processing and refining limits for metal minerals, non-metals and rocks have been regulated by the MEMR Regulations No. 5/2017 and No.25/2018.


Weekly News

Indonesia Adds Value to Mining Industry, Invests in Downstream Processing Facilities

October 17, 2019

Creating mining and minerals processing infrastructure to increase Indonesia’s mineral value while strengthening downstream processing capabilities has been at the core of the Indonesian mining authority and mineral export laws since 2009.

PT Borneo Alumina Indonesia has appointed a Black & Veatch-led Project Management Consortium (PMC) to develop one such processing facility, the first of its kind in Indonesia. Black & Veatch provides engineering solutions to power sector clients in Indonesia through PT Bina Viktori Indonesia (PT BVI).

The West Kalimantan facility will feature a 1 Million Tonne Per Annum (MTPA) smelter-grade alumina refinery, a 2×40,000 Normal cubic meter per hour (Nm3/hr) coal gasification plant and a 3×25 megawatt (MW) coal-fired power plant.

“Developing the downstream mineral processing industry will expand the Indonesian 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 (EPC) contractor to ensure that the client realizes the quality, safety and value they are seeking,” said Jim Spenceley, Senior Vice President, Mining, Black & Veatch.

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

Progesys is a minerals industry engineering company based in Canada. Jaya CM is an Indonesian construction management company.

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

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

Black & Veatch has supported clients worldwide on various infrastructure deployments by tapping into engineering innovation to address technical complexities in heavy industries like mining.



Weekly News

Adani Group Gets Relief From High Court In Coal Import Case

October 17, 2019

The Bombay High Court on Thursday quashed all Letters Rogatory sent by the Directorate of Revenue Intelligence to Singapore and other countries in its probe of Adani Group firms for alleged overvaluation of Indonesian coal imports.

The court said it did not go into merits of LRs issued by a metropolitan magistrate but found that due procedure had not been followed while issuing them.

Letters Rogatory are sent to investigative or judicial agencies in other countries when some information is required during a probe of off-shore entities.

A division bench of justices Ranjit More and Bharati H Dangre allowed the writ petition filed by Adani Enterprises Ltd., challenging the DRI’s action of getting LRs issued.

The bench, while quashing the LRs, noted that due process was not followed.

“… The action of the respondents in giving effect to the letters rogatory issued by the learned metropolitan magistrate, Mumbai… cannot be sustained and it deserves to be quashed and set aside,” the high court order said.

“We make it clear that we have not gone into the merits of the letters rogatory issued by the magistrate,” the judges said.

“We have only dealt with the contention as to whether it was permissible for the magistrate to issue such letters rogatory without following the procedure mandated by… CrPC (the Code of Criminal Procedure),” the bench said.

In September, AEL approached the high court seeking to quash the LRs, issued in 2016.

In March 2016, the DRI initiated probe against a few Adani group firms for alleged overvaluation of coal imports from Indonesia between 2011 and 2015.

LRs were issued to Singapore, Dubai and Hong Kong, seeking help to access documents lying with overseas branches of three state-owned banks relating to transaction under the probe.


Weekly News

Nickel Price Surges on Demand for Electric Cars and Indonesia Export Ban

October 19, 2019

The insatiable demand for storing energy in batteries has led to a surge in the price of nickel.

Its value has jumped by 69 per cent since the start of the year, when it was trading at $10,604.

Porsche is the latest big car manufacturer to take on the electric dream with its so-called Tesla killer, the Taycan electric sports car.

“At the moment, about 3 per cent of global nickel goes into electric vehicle batteries,” said James Stewart, Ausbil Global Resources Fund’s portfolio manager.

“Nickel is a very important commodity to EVs [electric vehicles] and the battery thematic.”

Eighty percent of the world’s nickel is used to make stainless steel for pipes and household items like fridges.

But electric battery makers are increasing the use of the metal to boost their firepower.

Indonesia driving up prices

Supply fears came to the fore last month after Indonesia announced it would ban nickel ore exports from 2020 as it develops an electric battery industry backed by Chinese stainless steel giant Tsingshan Group.

That led to prices hitting a five-year peak of $US18,153 per metric tonne.

But those concerns have since been overtaken by the economic uncertainty caused by the US-China trade war and China’s slowing economy — causing prices to slip below $US17,000.

However, prices could be set to rise again with stocks at the London Metal Exchange sitting at a six-year low, down 40 per cent since the start of October ahead of the Indonesian export ban.

Investment firm Paradigm Capital said in a research note that “current inventories are enough to cover roughly one week of consumption, which we characterise as critically tight”.

The demand for electric vehicles and storage batteries has added fuel to nickel’s fire with once-mothballed mines set to reopen.

Commonwealth Bank commodities strategist Vivek Dhar, said that could lead to a supply shortage in the near future.

“Now the technology for that is very risky right now and that’s another key support for this commodity.”

However, Mr Dhar said Indonesia’s plans to develop an electric battery industry are not guaranteed because of its lower grade nickel, which is more expensive to process into battery grade material.

“There are projects slated to come on in Indonesia but it’s a wait and see,” he said.

“If they prove to be more expensive, that’s a long-term support for nickel pricing.”

Australian miners could benefit

Mr Dhar also said that Australian nickel miners are well placed for the electric battery boom.

“The Australian producers like Western Areas, Independence Group, they do significantly well because their nickel is more easily convertible to battery grade nickel,” he said.

Western Areas sells its battery grade nickel ore to BHP’s Nickel West mine and smelter business in Western Australia and Tsingshan.

Dan Lougher, the managing director of Western Areas, said the miner was expanding to meet the growing demand for batteries in Asia.

“We’re touching base with all the precursor battery manufacturers in Asia and I think our product will be a prime product for that,” he said.

The battery boom has seen BHP hold onto Nickel West after it was unable to sell it a few years ago.

Amid the global financial crisis, BHP wrote down the value of its Ravensthorpe nickel mine in WA to zero as prices plunged and sold it for almost nothing.

Now Ravensthorpe is set to re-open for a third time under new owners — Canadian miner First Quantum Minerals.

Depends on car sales
The real test for nickel will be whether the bullish forecasts for the take up of electric vehicles come true.

Bloomberg New Energy Finance predicts sales of electric cars will top 10 million by 2025 globally — but just two million were sold last year.

Mr Stewart said the forecasts are optimistic but customer acceptance of electric cars is increasing.

“These vehicles are getting better, customer acceptance is getting better, range is getting better.

“So the general acceptance from customers is increasing for electric vehicles as well.”

Mr Lougher said China is leading the way in the development and uptake of electric vehicles.

“What is obvious though is most of these companies are setting up shop in China.”

While China was leading the way in the uptake of electric vehicles, the infrastructure needed to support electric cars is still being developed in many countries, Mr Dhar said.

“We need to have electricity infrastructure, we need to have charging stations,” he said.

“It’s not exactly a slam dunk that this exponential trend will grow as quickly as we anticipate.”


Weekly News

Moody's Gives Adaro Indonesia a "Ba1" Rating

October 16, 2019

Moody’s, an international debt rating agency, gave “Ba1” rating to PT Adaro Indonesia, a subsidiary of PT Adaro Energy Tbk (ADRO).

Masiam Hasnain, Assistant Vice President and Analyst at Moody’s said that Adaro Indonesia’s rating reflects a fairly strong relationship between the parent company and its subsidiaries. ADRO itself controls 88.5% of Adaro Indonesia shares.

In his official statement, Hasnain also mentioned ADRO as the coal producer with the largest single location in Indonesia. ADRO’s average annual production of thermal coal has reached 50 million tons since 2013.

However, this was not followed by diversification of business. The company only relies on thermal coal sales to support its performance over the next few years. The company’s credit quality is also slightly disrupted.

Moody’s consider ADRO’s credit outlook as stable. This is supported by the expectation that ADRO can extend its business license which will expire on October 2022.


Weekly News

West Wits Mining Writes Down Indonesian Assets and Accounts for Joint Arrangement

October 17, 2019

ASIC notes the decision by West Wits Mining Limited (West Wits) to write down the total capitalised exploration and evaluation expenditure of $9.63 million for its Derewo River Gold Project in Indonesia (Derewo Project) in its half-year financial report to 31 December 2018.

ASIC had raised concerns on the impairment assessment of the Derewo Project in the West Wits financial report for the year ended 30 June 2018. ASIC questioned the supportability of the recoverable amount in the absence of obtaining regulatory certification for the project since 2014. 

ASIC also notes the decision by West Wits to account for and disclose a joint arrangement in its financial report for the year ending 30 June 2019.

ASIC had raised concerns that West Wits did not account for and make appropriate disclosures in its financial report for the year ended 30 June 2018 for an agreement with another company to mine and rehabilitate a tenement.  

As outlined in ASIC media release 19-143MR Major financial reporting changes and other focuses, impairment testing and asset values, and off balance sheet accounting remain focus areas for financial reporting at 30 June 2019.

Directors are primarily responsible for the quality of an entity’s financial report. This includes ensuring that management produces quality financial information on a timely basis. Companies must have appropriate processes, records and analysis to support information in the financial report.

Companies should also apply appropriate experience and expertise to financial reporting, and to the processes and analyses supporting the information in the financial report. This is particularly important for potentially complex areas such as assessing impairment of non-financial assets and accounting for joint arrangements.


Weekly News

XCMG debuts new excavators and truck at Mining Indonesia 2019

October 16, 2019

XCMG brought all-new mining equipment to Mining Indonesia 2019, last month, as it went on the charm offensive in one of the major markets for mining trucks and shovels.

The company debuted three large-tonnage mining products as a complete solution set at the show, from September 18-21.

This included the “efficient expert” XE900D mining hydraulic excavator, the “energy-saving expert” XE1250 mining hydraulic excavator and “motor-driven warrior” XDA40 articulated dump truck.

During the show, XCMG also hosted a technology and production promotion conference of large-scale open-pit mining equipment that was attended by more than 100 mining and construction companies across Indonesia, it said.

XCMG signed multiple strategic collaborations with notable Indonesia mining companies, including orders that totalled $50 million, the company added.

Zong Li, Vice GM of XCMG Group, said: “XCMG’s market share in Indonesia is growing year-by-year, the series of events in Indonesia further enabled XCMG to expand its services in the Southeast Asian market as well as local support.”

A key member of China’s ‘Belt and Road’ Initiative, Indonesia has a plethora of mining machinery from XCMG, which have delivered excellent performance in mining projects across Indonesia, aiding the local infrastructure and economic development, the company said.


Weekly News

Merdeka Copper Gold Will Conduct Stock Split

October 15, 2019

PT Merdeka Copper Gold Tbk (MDKA) will conduct stock split. The plan has been approved by the company’s shareholders during its Extraordinary General Meeting of Shareholders (EGMS) on 25 September 2019.

The stock split will be conducted with a ratio of 1 (one) old share to 5 (five) new shares or 1: 5. “So that the nominal value of MDKA shares, which was originally valued at Rp 100 per share, will drop to Rp 20 per share,” said MDKA management in an expose on the Indonesia Stock Exchange website on Monday (14/10).

As quoted from RTI, at present, MDKA shares are at the level of Rp 6,250 per share.

Corporate Secretary of MDKA, Adi Adriansyah Sjoekri, said that the stock split would be done in order to increase the number of MDKA shares, which is expected to boost stock liquidity. “In addition, MDKA will open access for retail investors to invest in the company’s shares,” Adi told some time ago.

The trading of shares with the old nominal value in the regular and negotiated market will be ended on 17 October 2019, and the shares with the new nominal value will be traded in the regular and negotiated market starting from 18 October 2019, and in the cash market from 22 October 2019.


Weekly News

Vale Indonesia Is Optimistic to Record Nickel Production of 71,000 Metric Tons This Year

October 15, 2019

PT Vale Indonesia Tbk (INCO) recorded nickel production of 19,820 metric tons (matte) in the third quarter (Q3) of 2019, 12% higher than its record in the second quarter of 2019 and 9% higher than its record in Q3 2018 of 18,192 metric tons.

As quoted from the company disclosure, Nico Kanter, CEO and President Director of PT Vale Indonesia Tbk (INCO) said the increase in production volume was due to the completion of maintenance work on the company’s key assets. “We are optimistic that we can achieve our nickel production target of 71,000 metric tons (matte) this year,” he said.

However, the company’s total production volume up to Q3 2019 was 50,531 metric tons, 7% lower than its record in Q3 2018 of 54,227 metric tons.


Weekly News

GSM is Exploring Pani Gold Mine

October 18, 2019

PT Gorontalo Sejahtera Mining (GSM), an indirect subsidiary of PT J Resources Asia Pacific Tbk (PBSA), has begun the exploration at Pani gold mine, Gorontalo. As of September 2019, the company has spent US$ 488,674 on the exploration.

As quoted from the company disclosure, GSM has upgraded the status of its activities from “work contract” phase to “production operations” based on the Minister of ESDM Decree No.457 / 2017 which was issued on 13 December 2017. So far, the company is continuing geological mapping on a 10 km line in Pani Block and drilling in 10 locations with a total depth of 1,305.50 meters.

In October 2019, the company’s work plans will include geological mapping in the Wahi and Jahiya areas and continuing scout drilling in the Bolangitang Block.


Weekly News

Indonesia Amends Regulation on Nickel Export to Boost Production of Value-Added Products

October 19, 2019

In a bid to expedite nickel processing domestically, the Indonesian Ministry of Energy and Mineral Resources (MEMR) issued MEMR Regulation No. 11/2019 amending MEMR Regulation No. 25/2018 on the Utilization of Mining Minerals and Coal (MEMR Regulation No. 25/2018).

Effective 1 January 2020 export of low grade nickel is forbidden, two years ahead of schedule, while MEMR Decree No. 154/2019 specifies the implementation of the smelting facilities requirement.

Nickel export restriction

Generally there are several points that were amended by MEMR Regulation No. 11/2019:

  1. The ban on nickel ore export with content below 1.7% Ni is accelerated to 31 December 2019. Previously, companies were allowed to export the mineral until 11 January 2022, subject to progress of the company’s establishment of smelter facilities.
  2. Any export recommendation that has been issued by the MEMR for nickel ore export with content below 1.7% Ni prior to the issuance of MEMR Regulation No. 11/2019 remains valid. However, that recommendation will expire on 31 December 2019. The MEMR Regulation No. 11/2019 will be effective on 1 January 2020.
  3. The MEMR would still be able to issue export recommendation for nickel ore with content below 1.7% Ni until the 31 December 2019.

Smelter construction in Indonesia

With the objective of supporting production of value-added products domestically, the Indonesian Mining Law, Law No. 4 of 2009, obliges companies to process and refine mining minerals in Indonesia.

Indonesia first announced the nickel ore export ban in 2014 that was relaxed in 2017 to a quota system, following strong market rejection. Ministry of Energy and Mineral Resources (MEMR) Regulation No. 25/2018 allows for export of certain types of mining minerals until 2022 provided that minimum requirements for processing and refining are met; companies are required to build or are in the process of building smelters for relevant mining minerals in Indonesia.

The MEMR Regulation No. 25/2018 regulates several points in relation to the issuance of export permit:

  1. Ninety percent of the smelter’s physical construction development plan should have been completed, calculated and verified by an independent verifier.
  2. Sanctions on failure to meet the 90% smelter construction plan would be: (a) recommendation to revoke the export approval to the relevant authority and (b) a penalty of 20% of the export cumulative value
  3. Failure to pay such penalty would result in: (a) a temporary suspension of a certain part or all aspect of business activities for maximum 60 days and (b) a license revocation if no payment is received after the 60 days.

To specify these provisions, the MEMR issued Decree No. 154/2019:

  1. The progress for smelter establishment should be at least 90% of the smelter’s physical construction development plan for every six-month period based on the report of an independent verifier.
  2. Failure to satisfy this obligation would result in: (a) the issuance of temporary export suspension recommendation to the relevant government authorities in charge of international trade and (b) penalty of 20% of the export cumulative value in the last six months period.
  3. Failure to pay the penalty would result in: (a) temporary suspension of certain part or entire business activities for maximum 60 days, (b) license revocation if no payment is received after 60 days of the temporary suspension, and (c) the issuance of export suspension recommendation to the relevant government authorities in charge of international trade.
  4. To guarantee the 90% smelter establishment completion progress and penalty payment, mining companies are required to deposit a surety bond of 5% of export volume for each shipping multiplied by the export benchmark price. A mining company will be entitled to withdraw the surety bond if it has completed at least 75% of the overall smelter construction plan. The government holds the rights to the surety bond if the mining company fails to meet its obligations.

MEMR Decree No. 154/2019 came into effect on 26 August 2019. Mining companies that export nickels with content below 1.7% Ni are subject to its provisions until MEMR Regulation No. 11/2019 is effective on 1 January 2020.

Indonesia’s plan on producing value-added products

The Indonesian government has stated that the country would phase out exporting raw materials to encourage the production of value-added products, including minerals. This is in line with the country’s aspiration to build on skilled workforce and high-tech industries.

Early in September, the director general of the Ministry of Energy and Mineral Resources said in a national publication that Indonesia currently has 11 smelters in operation with 25 more expected to come online.

As one of the world’s largest producer of nickel ore, Indonesia would like to utilize its nickel reserves to support its electric vehicle (EV) ambition, as refined nickel and cobalt are materials for EV batteries.

Indonesia is working towards its plan to be Asia’s production hub for electric vehicles for export in the APAC region.


Weekly News

Vale Indonesia's Shares Strengthen by More Than 3%

October 14, 2019

The share price of PT Vale Indonesia Tbk (INCO) strengthened in Monday (14/10) trading following the signing of a preliminary agreement with PT Inalum (Persero) regarding the company’s divestment plan.

Based on Bloomberg data, the price of INCO shares rose by 3.13% or 120 points to the level of Rp 3,950 per share at the end of the first trading session today. INCO shares were opened at Rp3,830 per share.

In the first session, 52.53 million of INCO shares was traded with a total transaction value of Rp 204,43 billion. Sucor Sekuritas was recorded as the securities company that traded most of INCO shares, followed by Millenium Atlantic Sekuritas, Mandiri Sekuritas, dan CIMB Sekuritas.

Meanwhile, during the current year, the price of INCO shares has risen by 21.17%. The highest closing price was Rp 3,980 on 17 May 2019, while the lowest level was Rp 2,470 on 6 February 2019.

The company currently has a market capitalization of around Rp 39.25 trillion. As of the end of September 2019, INCO shares are owned by Vale Canada Limited (58.73%), Sumitomo Metal Mining Co. Ltd. (20.09%), and the public (21.18%).


Weekly News

Bright Future in Metals

Vale has had a presence in Indonesia since 1968, and it has capitalized on nickel production to become a major player, contributing 4 percent of the global supply of the metal, used in stainless steel, various alloys and rechargeable batteries. Vale utilizes an integrated mining process and performs post-mining rehabilitation. The company is also mindful of its impact on the environment and uses an environmentally friendly source of energy to power its operations.

The company reported an increase in production and sales so far this year, compared with the same period a year ago. This is due to the nickel business having been especially profitable recently. The nickel price has been increasing steadily over several weeks amid rumors that the Indonesian government would ban exports. This regulation, if implemented, would boost the company’s business as it would further push up the metal’s price. With the regulation in mind, the company stated its intention to fully comply with the new rule of trade but that it was also still committed to be one of the most responsible nickel producers. “Vale is committed the realization of the regulation, but also the goal of honoring trade agreements with our clients and the government,” said Bernardus Irmanto, the company’s financial director.

The integrated mining company said it would maintain its growth momentum for the rest of the year. It is currently preoccupied with maintenance and development of its Larona Hydroelectric Plant in Sorowako, South Sulawesi, which has resulted in a slight dip in production. The company said it would increase production after completion of the maintenance in April next year. Vale is confident that it would maintain its edge in the mining industry, as Indonesia is the second-largest producer of nickel ore in the world, behind the Philippines.

The company has also been expanding its operations with the building of two new smelters, one in Pomalaa, Southeast Sulawesi, and the other in Bahodopi, Central Sulawesi. Vale is collaborating with Japan-based Sumitomo Metal Mining on the development of the Pomalaa ferronickel smelter, which will cost $2,5 billion for the smelter, and an additional $300 million to excavate the mine. The smelter in Bahodopi meanwhile, is still in the commercial discussion stage, but construction may start soon. It is projected to cost $2,1 billion for the smelter, $1,8 billion for the facilities and another $300 million to excavate the mine.

Vale is not only focused on developing its facilities, but also in the process of complying with a divestment requirement, in accordance with the 2014 contract of work amendment. The company aims to meet the deadline set for the end of October this year. Vale Indonesia chief executive Nico Kanter said the company was committed to delivering on its divestment promise and that it was working with the government to ensure the share distribution occurs in a proper manner. “The president is ensuring a fast and smooth process,” Kanter said. “The government will support the move and Vale will show its commitment.”


Weekly News

Toshiba Helps Indonesia build CO2-free Energy System

Toshiba and an Indonesian state-owned company have sealed a deal on building hydrogen-based energy systems with zero CO2 emission to meet electrical power in the country’ remote areas.

Indonesian news agency ANTARA on October 13 quoted an official statement from Toshiba, which announced the memorandum of understanding was signed between Toshiba Energy Systems & Solutions Corporation (Toshiba ESS) and Perusahaan Listrik Negara (PLN) during the 6th Indonesia-Japan Energy Forum held by the Japanese Ministry of Economy, Trade and Industry (METI).

According to the MoU, Toshiba ESS and the PLN will evaluate viable technologies and policies necessary for an advanced adoption of the commercial H2One™ in Indonesia by 2023.

H2One™ is an integrated system that uses a renewable energy source to electrolyze hydrogen from water, stores and uses the hydrogen in fuel cells to provide a stable delivery of CO2-free, environmentally-friendly electricity and hot water.

The MoU is in line with Indonesia’s Electricity Power Supply Business Plan (RUPTL), which aims to increase the rate of its renewal energy capacity from 12.52 percent in 2017 to 23 percent by 2025.

The pact is also a follow up to another MoU signed between Toshiba and the Indonesian Agency in August 2018 for the Assessment and Application of Technology (BPPT) on conducting a joint survey for the accelerated adoption of H2One™.

The development and survey of H2One™ adopted project was entrusted to Toshiba ESS in September 2018. The company subsequently identified areas where the system could be adopted by February 2019. It is now working for the implementation of a demonstration system.


Weekly News

China Copper Smelters Hike Fourth-Quarter Treatment Charge Floor Ahead of 2020 Talks

China’s top copper smelters on Thursday raised their fourth-quarter floor treatment and refining charges (TC/RCs) by 20% from the previous quarter, according to three people with knowledge of the matter.

The China Smelters Purchase Team (CSPT) set the treatment charge floor at $66 per tonne, and the refining charge floor at 6.6 cents a pound at a meeting in Shanghai, said the sources, who asked not to be identified due to the sensitivity of the matter.

That was up from $55 a tonne and 5.5 cents a pound in the third quarter, but still below the $90 a tonne and 9 cents a pound set for the fourth quarter of last year.

“Easing (restrictions) from an Indonesian miner …and compounding smelters’ closures and maintenance in October both contribute to spot TC’s hike, then a CSPT floor price hike, and hopefully a benchmark hike next year,” said a trader with a private smelter.

Last month, Indonesia authorities approved an increase in copper concentrate exports for a unit of Freeport McMoran Inc, while research house Antaike said there were plans for some smelting overhauls in October.

Copper miners pay TC/RCs to smelters to process their ore into refined metal. Higher charges indicate more abundant concentrate supply or that smelters have less need.

The floor price agreed on Thursday also serves as an indication of the position that smelters in China, the world’s top copper consumer, will take in negotiations on a TC/RC benchmark for 2020, used for longer-term deals.

The benchmark is usually determined at a major November copper gathering in Shanghai.

Even as spot TC/RCs usually hike in the fourth quarter, a source at a large mining firm said he saw no fundamentals-based rationale behind the move, given recent supply disruptions and a decline in spot TC/RCs this year.

“I don’t think they can buy a lot of tonnes of clean concentrate at that spot number,” the source said, noting a supply disruption at the giant Las Bambas mine in Peru.

Smelter expansions in China, including Zijin Mining’s recent launch of a 150,000 tonnes per year plant in the northeastern city of Qiqihar, has also added to competition for concentrate.

Spot TC/RCs bottomed at a near seven-year low of $55.50 earlier this month before edging up to $56.50 a tonne, having fallen around 38% this year, squeezing smelters’ margins.

CSPT members are supposed to adhere to the floor charges in any spot processing deals.

Huludao Dongfang Copper Industry Co Ltd, part-owned by Metallurgical Corp of China, and Zhejiang Jiangtong Fuye Heding Copper Co Ltd, a joint venture of CSPT member Jiangxi Copper, are joining the CSPT, three smelter sources said, which would increase the group’s membership to 12.

It was not immediately clear when the two firms, accounting for some 450,000-tonne annual capacity combined, would officially become members.


Weekly News

Asiamet Resources (LON:ARS) Hits New 52-Week Low at $2.77

Asiamet Resources Ltd (LON:ARS) shares hit a new 52-week low on Wednesday . The stock traded as low as GBX 2.77 ($0.04) and last traded at GBX 2.83 ($0.04), with a volume of 4584402 shares trading hands. The stock had previously closed at GBX 3.05 ($0.04).

Separately, Liberum Capital restated a “buy” rating on shares of Asiamet Resources in a research note on Wednesday, July 3rd.

The company has a market capitalization of $25.98 million and a price-to-earnings ratio of -3.08. The company has a quick ratio of 0.53, a current ratio of 0.58 and a debt-to-equity ratio of 208.89. The company’s 50 day simple moving average is GBX 3.23 and its two-hundred day simple moving average is GBX 4.89.

In other news, insider Tony Manini bought 200,000 shares of the stock in a transaction on Thursday, September 19th. The stock was bought at an average cost of GBX 3 ($0.04) per share, for a total transaction of £6,000 ($7,840.06).

About Asiamet Resources (LON:ARS)

Asiamet Resources Limited engages in the acquisition, exploration, and development of mineral deposits in Indonesia. Its principal properties include the BKM copper and BKZ polymetallic projects located in Kalimantan, Indonesia, as well as a copper-gold porphyry deposit located on the island of Sumatra, Indonesia.


Mining People on The Move

BlackGold Natural Resources - Philip Cecil Rickard

BlackGold Natural Resources Chairman, Chief Executive Resigns

BLACKGOLD Natural Resources chairman and chief executive Philip Cecil Rickard is resigning in light of changes to the group’s business strategy and direction, it said on Wednesday.

Mr Rickard, 50, said he has chosen to spend time with his family, since BlackGold’s planned investment in a coal-fired power plant project in Riau, Indonesia failed to pan out. The company had announced it was pulling its plans for the project 11 months ago.

The firm was also entangled in an Indonesian power plant graft scandal last year.

Mr Rickard has helmed the company since March 2018, and will not seek re-election at the company’s upcoming annual general meeting (AGM) to be held on Oct 31.

Andreas Rinaldi, 69, has been appointed CEO-designate with effect from Wednesday. He will replace Mr Rickard as CEO after the upcoming AGM.

Philip Soh Sai Kiang will be re-designated from independent director to independent non-executive chairman of the board following the conclusion of the company’s AGM.


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.


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”.


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