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September 2019 | Volume 27

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Weekly News

Indonesia Could Plug Nickel Pig Iron Gap Caused by Its Ore Export Ban


Indonesia may be able to plug an expected shortfall in nickel pig iron (NPI) supplies caused by its nickel ore export ban starting next year by boosting its own capacity to produce the semi-finished metal used to make stainless steel.

China, the world’s biggest nickel user, has traditionally imported nickel ore from Indonesia, the world’s biggest ore producer, to produce NPI to make stainless steel. But that supply chain will be disrupted by the ore export ban set to start on Jan. 1, part of Indonesia’s push to develop a higher-value domestic metal processing industry.

Indonesia accounted for 26% of global nickel ore supplies last year, according to the International Nickel Study Group, but since 2016 has ramped up production of NPI, an intermediate product containing around 10% nickel used by stainless steel mills.

The increase in NPI production has mostly come from Chinese companies operating in Indonesia.

From nearly zero in 2014, Indonesia’s NPI output climbed to 261,000 tonnes a year in 2018, according to data from Australia’s Macquarie Group Ltd.

That could climb to as much as 530,000 tonnes in 2020, according to estimates from Chinese trading firm Grand Flow Resources.

“It is estimated that the annual increase of nickel metal content in NPI will be 130,000 tonnes a year. The high speed expansion will extend from 2020 to 2021,” said Wang Chongfeng, an analyst at Grand Flow Resources.

Energy and minerals consultants Wood Mackenzie forecast that by 2021, Indonesian NPI output will surpass China’s, which is estimated at 570,000 tonnes this year.

GRAPHIC: Primary nickel production by top producers

Primary Nickel Output by Top Producer graphic

“It is possible some, and ultimately all, of the lost NPI production in China could be offset by NPI production increase in Indonesia – but this will take some time,” said analyst Linda Zhang of Wood Mackenzie.

The expected disruption of ore supply and the resulting curtailment of Chinese NPI output has caused nickel prices to surge.

London nickel hit a five-year high and has leaped over 70% this year, while Shanghai nickel hit a record as markets feared the stainless steel industry, which consumes 70% of global nickel output, will lack supplies.


Source : https://www.reuters.com/article/us-nickel-supply-indonesia/indonesia-could-plug-nickel-pig-iron-gap-caused-by-its-ore-export-ban-idUSKCN1VN0XM

Weekly News

Global Nickel Supply to Drop on Indonesia's Ore Export Ban in 2020


Indonesia said on Monday it will stop nickel ore exports from January 1, 2020, two years earlier than initially indicated, as it speeds up efforts to process more of its resources at home.

Bambang Gatot Ariyono, the director general for coal and minerals at the Ministry of Energy and Mineral Resources, said the ban will be applicable to all grades of nickel ore and ordered exporters to stop shipments from that date regardless of standing contracts.

“That is why we are announcing now so they have four months of transition time,” Ariyono told reporters.

Nickel prices have surged on speculation about an expedited ban and Monday’s announcement. The three-month nickel contract on the London Metal Exchange rose as much as 5.3% to $18,850 a tonne on Monday, its highest in nearly five years, adding to Friday’s 9% gain.

Goldman Sachs said in a note on Sunday it expects London nickel prices to reach $20,000 per tonne in three months due to the ban.

Indonesia, the world’s biggest nickel ore producer, accounted for 26% of global nickel ore supply last year, according to the International Nickel Study Group, and the ban will affect the supply of ore to China, the world’s biggest nickel consumer.

China imports the ore to produce nickel pig iron (NPI) that is then used to produce stainless steel. The ore ban is likely to disrupt China’s NPI output, though Indonesia may be able to make up the shortfall.

Antaike, the research arm of the China Nonferrous Metals Industry Association, said in a note on Monday the global nickel market will be in a deficit of more than 100,000 tonnes in 2020 due to the expedited ban, as opposed to a 40,000 tonne deficit without it.

Companies that produce nickel, also used for batteries for electric vehicles, are calculating how long their current ore inventories will last, Antaike said.

Nickel ore stockpiles at Chinese ports stood at 13.33 million tonnes as of August 30, of which 2.76 million tonnes were from Indonesia and 10.46 million tonnes were from the Philippines, Antaike Chief Nickel Analyst Xu Aidong said.

“Maybe some Philippines nickel ore will replace or offset the shortage but it couldn’t meet all the requirement for the Chinese companies because the grade of Philippine nickel ore is lower than that of Indonesia,” Xu said.

ACCELERATED BAN
Indonesia had initially said it would ban nickel ore exports from January 2022, according to a rule released in 2017. On Monday, Ariyono said the timetable was expedited because of the limited pool of mineable nickel resources.

“The national proven reserve for nickel is only 698 million tonnes, which can only supply smelting facilities for 7.3 years,” he told reporters, adding that Indonesia currently has 11 working smelters with input capacity of 24 million tonnes of ore. It has 25 more smelting facilities in the pipeline.

While the nickel ore ban has been moved up, Indonesia will end exports of bauxite and copper concentrates in 2022 as planned.

Local miners have complained that their smelter projects will stall if exports are cut off, stopping the revenue stream needed to finance development. Ariyono said miners should not rely only on revenue from exports to finance their smelters.

State miner PT Aneka Tambang (Antam) is ready to support the new policy, Chief Executive Arie Prabowo Ariotedjo said in a text message, adding that the rules will benefit companies that already have smelters such as Antam.

The government aims to have 36 nickel smelters by 2022 with a total input capacity of 81 million tonnes.

Ariyono, said there are four mega projects among the 25 smelters currently in the pipeline.

These projects will help Indonesia accelerate the development of its electric vehicle (EV) battery industry, he said.

Luhut Pandjaitan, coordinating minister overseeing mining, said investment into nickel processing plants has reached $10 billion and expects an additional $20 billion in the next five years.

“We will have the supply chain and become a global player in lithium battery production through to electric vehicles,” Pandjaitan said.

Indonesia has put the export ban in place to support the EV battery industry by keeping cobalt resources, which are important for lithium batteries, in the country since they are typically found in the low-grade nickel ores that are shipped out, said Sukhyar, an official with the Industry Ministry, who previously was director general for coal and minerals.

“We are talking about building industry for electric vehicles, which need cobalt as material. Why are we exporting them?,” he said.


Source : https://www.reuters.com/article/indonesia-mining/global-nickel-supply-to-drop-on-indonesias-ore-export-ban-in-2020-idINKCN1VN118

Weekly News

Indonesia to Ban Nickel Exports from January 2020


The Energy and Mineral Resources Ministry has announced that Indonesia will stop nickel exports as of Jan. 1 next year to accelerate the establishment of domestic smelters while its nickel reserves are limited.

According to coal and minerals director general Bambang Gatot Ariyono, Indonesia would need 81 million tons nickel ore supply per year as it currently has 11 working smelters and would build 25 more.

Bambang said that the ban of nickel ore exports was in line with the national plan to accelerate the establishment of smelters so that Indonesia could sell value-added nickel products such as stainless steel slabs.

“We already exported 38 million tons up until July this year. At this rate, we would need to think about our reserves especially if we keep issuing exports permits,” he said at a press conference on Monday.

Indonesia mostly exports raw nickel ore instead of intermediate products such as batteries and stainless steel.

“We would stop exporting all quality of nickel, not just ore with 1.7 percent nickel,” he told the press.

Bambang said the government is giving mining companies four months to complete their exports contracts as all exports would need to be completed by Dec. 31.

The date is two years earlier than the government’s initial plan to ban nickel ore exports in January 2022.

Indonesia was the world’s largest nickel producer in 2018 with 560,000 tons. The nation’s average production is expected to grow 8.1 percent in the 2018-2027 period, outperforming all other global nickel producers such as the Philippines and Canada.

Indonesia had proven reserves of about 698 million tons of nickel that could be mined for the next seven to eight years.

Bambang acknowledged that Indonesia actually had potential reserves of 2.8 billion tons of nickel but they needed to be explored.


Source : https://www.thejakartapost.com/news/2019/09/02/indonesia-to-ban-nickel-exports-from-january-2020.html

Weekly News

Indonesia Will Halt Nickel Ore Exports Earlier Than Planned


The government has issued a new rule that would ban exports of nickel ore from next year, as part of a latest attempt to boost processing capacity in the local industry.

It first imposed a ban in 2014 to force miners to process the country’s mineral resources domestically. Three years later, the government decided to give miners leeway and allow them to export low-grade ore until 2022, so they could use the proceeds to build local smelters, as required.

However, Energy and Mineral Resources Minister Ignasius Jonan has now issued a new regulation, only allowing these exports to continue until the end of this year.

Ministry spokesman Agung Pribadi confirmed the ban over the weekend and said more detail on the new regulation would be announced on Monday.

“There will be a press conference on that,” he said.

Vale Indonesia, the country’s largest nickel producer, earlier voiced support for the plan, noting that most of the country’s low-grade nickel ore exports end up being stockpiled in China. Chinese manufacturers use the nickel to produce rechargeable batteries – a key component in the electric vehicle industry, which Indonesia wishes to develop.

Shares of Vale and state-controlled Antam traded 15 percent and 5.6 percent higher, respectively, on the Indonesia Stock Exchange (IDX) on Monday, following news of the plan.

Meidy Katrin Lengkey, secretary of the Indonesian Nickel Mining Association (APNI), said the lobby group was concerned about the ban, as it would deprive members of a source of key funding to develop local smelters.

“We’ve been constructing smelters since 2017, expecting to complete them by 2022. In 2019, the government said we could not export anymore. We have built the foundation and ask for the government’s commitment. We are carrying out the development, [and funding it] from export proceeds,” Meidy said.

There are 51 companies currently building smelters in Indonesia, 15 of which are already operational.

Meidy said miners can sell their ore to local smelters, but at a lower price than on the international market. Payment by local smelters is also usually late.

This means miners that have yet to complete their smelters get less revenue, which makes it more difficult for them to pay for smelter construction.

Coordinating Maritime Affairs Minister Luhut Binsar Panjaitan told CNBC Indonesia last week that the government planned to issue a benchmark price for nickel ore to address the pricing issue.

Jonatan Handoyo, founder of the Indonesian Mineral Processing and Purification Association (AP3I), said the regulation was a necessary move to correct previous policy.

He said allowing low-grade nickel exports had accelerated production by Indonesian mines, potentially leaving the country with small reserves by the time the smelters come on stream.

“The government took the most logical step. It is correct, despite being five years late,” Jonatan said.


Source : https://jakartaglobe.id/context/indonesia-will-halt-nickel-ore-exports-earlier-than-planned/

Weekly News

Sentiment Lifts in Indonesian Low-CV Coal Market


Further signs began to emerge that low-calorific value (CV) Indonesian coal prices could be starting to firm, with bids emerging at slightly higher levels than yesterday.

Details also began to emergethat Chinese state-owned utility Huadian earlier this week awarded two Panamaxes of NAR 3,800 kcal/kg (GAR 4,200 kcal/kg) Indonesian coal at around 338 yuan/t cfr Fujian plus value-added tax (VAT) for delivery in October. The price nets back to about $31.50/t fob Indonesia.

The award price of the NAR 3,800 kcal/kg coal appear on the low side now, market participants said, given that Indonesian coal producers have lifted their offers since last week after consecutive weekly price falls since early July.

Huadian also bought a Panamax of NAR 4,700 kcal/kg (GAR 5,100) Indonesian coal through the same tender at Yn449/t cfr Fujian plus VAT for October arrival. The price nets back to $46.60/t fob Indonesia.

But traders reported a further increase in enquiries from Indian buyers seeking post-monsoon cargoes, A market view is developing that the GAR 4,200 kcal/kg market has already found a floor above $30/t.

Trades in the GAR 4,200 kcal/kg spot market have been slow to emerge this week, although bids for September- and October-loading geared supramax cargoes were in a $30.50-31/t range, which was up slightly from yesterday’s $30-31/t. Offers were around $31.50-32/t compared with yesterday’s$31-33/t range.

Trade in the ICI 4 derivatives market was muted today after a total of 30,000t traded yesterday, when 15,000t of October and 15,000t of November contracts traded as part of a package, both at $31.50/t.

Bids and offers in the derivatives market were also scarce today, with October bid at $31.75/t and offered at $31.85/t. By comparison the last Argus assessment price for October ICI 4 futures was at $31.45/t yesterday.

The fob Newcastle Australian market saw a September-loading Capesize cargo of NAR 5,500 kcal/kg coal traded at $48/t fob. But this could not immediately be confirmed and is irrelevant to the index, which rolls over this week to capture October- and November-loading cargoes.

But market participants remain mostly concentrated on very prompt trading.

At least one producer yesterday lowered its offer level for September-loading Capesizes of NAR 5,500 kcal/kg coal to $47/t fob Newcastle. By comparison the best confirmed offer reported to Argus last week was at $48/t fob Newcastle for a cross-month September-October Capesize, with the bulk of offers around $49/t fob Newcastle. The assessment was priced at $47.85/t fob Newcastle for the week ended 30 August, down by $1.36/t.

An October-loading Panamax in the NAR 6,000 kcal/kg market traded at $60/t fob Newcastle over the counter. A 25,000t clip traded on screen at $66/t fob Newcastle for December loading but this was also irrelevant to the Argus index.

China’s domestic market saw bids for domestic NAR 5,500 kcal/kg coal around Yn575-580/t fob north China ports, with offers around Yn580/t, both steady from yesterday.

China’s futures market had the September contract on the Zhengzhou commodity exchange close at Yn573.80/t today, down by Yn0.20/t from yesterday. The most actively traded November contract closed at Yn584.20/t, up by Yn1.80/t from yesterday.


Source : https://www.argusmedia.com/en/news/1970258-sentiment-lifts-in-indonesian-lowcv-coal-market

Weekly News

Dian Swastika Generated US$ 832.06 Million in Revenue in 1H 2019


PT Dian Swastatika Sentosa Tbk (DSSA), a coal mining company, generated the revenue of US$ 832.06 million in the first semester of 2019, slightly up compared with the same period last year, its revenue achieved at US$ 823.77 million. This increased revenue also followed by the growth in the profit for the period from US$ 39.14 million to US$ 47.83 million.

Based on the company’s financial statement in the first semester of 2019, the largest contributor to the revenue consisted of the coal mining and trading of US$ 495.93 million, the sale of electricity, construction and financial of US$ 181.99 million, the trading od US$ 109.64 million, the steam and electricity generation services of US$ 24.23 million, the cable TV and internet of US$ 19.64 million, the forestry of US$ 554,144, and the others of US$ 79,517.

The largest market consisted of Indonesia (US$ 513.12 million), followed by China (US$ 169.57 million), India (US$ 114.12 million), Pakistan (US$ 16.02 million), Philippines (US$ 6.32 million), Cambodia (US$ 4.51 million), Singapore (US$ 4.01 million), Taiwan (US$ 2.80 million), and Vietnam (US$ 1.56 million).


Source : https://www.idnfinancials.com/dssa/pt-dian-swastatika-sentosa-tbk#news

Weekly News

Indonesia Sees Surge in Nickel-Related Exports After Ore Export Ban


Indonesia’s ban on nickel ore exports could boost the country’s earnings from the metal five-fold in the next five years through growth in industries such as stainless steel and battery materials, a minister said on Wednesday.

In a move that threatens to cut global supply, the world’s top nickel miner said this week it would stop nickel ore exports from Jan. 1, 2020, two years earlier than initially indicated, to promote more domestic processing.

Luhut Pandjaitan, a coordinating minister overseeing mining, said nickel-related export earnings will surge from last year’s $5.8 billion, with investment in processing pouring into the nickel-rich region of Morowali in Central Sulawesi province.

“Now (exports) may be at $7.8 billion, in 2020 they will reach $12 billion and in 2024 they may exceed $30 billion, including exports of lithium batteries,” Pandjaitan said at Indonesia’s first electric car show.

Indonesian authorities have expressed hopes that nickel-related industries such as the production of stainless steel and battery materials will grow to become one of the country’s main industries, overshadowing current top commodity palm oil in 10 to 15 years.

Pandjaitan said the current investment pipeline showed that as much as $30 billion could be spent on nickel processing in the Morowali region to 2024.

That includes a $4 billion lithium battery project by several companies, including Contemporary Amperex Technology Co Ltd (CATL) which supplies batteries for carmakers like Volkswagen, Mercedes and Tesla, the minister said, noting this will either start at the end of the year or early 2020.

Indonesia aims to have 36 nickel smelters by 2022 with a total ore processing capacity of 81 million tonnes per year.

Southeast Asia’s largest economy also aspires to become an electric vehicle (EV) hub for Asia and beyond with a target to start EV production in 2022. The government has laid out tax incentives to encourage investment in the sector.

Automotive companies like Japan’s Toyota Motor Corp, which has a plan to invest $2 billion in EV production in Indonesia according to authorities, Mitsubishi Motors Corp, China’s Wuling Motors Holding and Dongfeng Sokon Indonesian unit are displaying their EV prototypes in the car show.


Source : https://www.reuters.com/article/us-indonesia-mining/indonesia-sees-surge-in-nickel-related-exports-after-ore-export-ban-idUSKCN1VP0KF

Weekly News

Bids, Offers for Low-CV Indonesian Coal Edge Higher


There were further signs that the low-calorific value (CV) Indonesian market may be starting to edge higher, with sellers raising their offer prices amid an increase in buyers’ enquiries.

The emergence of a relatively large Chinese utility for low- to mid-CV coal may have also encouraged some sellers to raise their offer prices. A number of Indonesian producers are focusing on increasing sales to the domestic market to take advantage of a price premium following the recent drop in seaborne prices.

Chinese state-controlled utility Huaneng has issued a tender to buy 590,000t of imported thermal coal for delivery to its coastal power plants in October, which is normally the shoulder season for power demand.

The utility is seeking coal with a CV in a NAR 3,800-5,500 kcal/kg range. It did not specify an origin for most of the cargoes but they most will likely be from Indonesia or Russia. Huaneng will accept submissions between 6pm Beijing time (10:00 GMT) on 3 September to 10am Beijing time on 6 September.

The spot GAR 4,200 kcal/kg market saw a September-loading geared supramax cargo trade at $31.80/t, while another September-loading shipment possibly traded at the slightly lower price of $31.40/t. These cargoes fall outside the current 60-day October and November-loading window for inclusion in the Argus index. Bids for September-loading GAR 4,200 kcal/kg cargoes were at $31-31.50/t, up from yesterday’s $30-31/t range. Offers increased to around $32-33/t, up from $31.50-32/t yesterday.

Trade in the ICI 4 derivatives market was quiet. September contracts were bid at $31.60-32/t with different Singapore brokers and offered at $32.30/t. The last Argus settlement price for September ICI 4 contracts was at $31.40/t on 30 August. October ICI 4 contracts were bid at $31.70-31.75/t and offered at $32-32.10/t, up from yesterday’s Argus settlement price for October ICI 4 futures at $31.40/t.

The Australian market saw an international trading selling three cargoes of NAR 5,500 kcal/kg coal into India at $45.50/t fob for loading during September-November. The port of origin was not immediately clear. But at least some, if not all of these shipments, are possibly Australian material.

China’s domestic coal prices were little changed from yesterday. Bids for domestic NAR 5,500 kcal/kg coal were around 575-580 yuan/t fob north China ports, while offers were around Yn580/t.

China’s futures market saw the September contract on the Zhengzhou commodities exchange close at Yn571.20/t, down by Yn2.60/t from yesterday. The main November contract closed at Yn590.20/t, up by Yn6/t from yesterday.


Source : https://www.argusmedia.com/en/news/1971094-bids-offers-for-lowcv-indonesian-coal-edge-higher

Weekly News

Small Miners Slam Govt Nickel Export Ban


The announcement from the Energy and Mineral Resources Ministry that Indonesia, the world’s top supplier of nickel ore, will ban shipments of nickel ore in January, drove up global nickel prices on Tuesday to the level last seen five years ago.

The commodity is exported mostly to Japan and China, and is then processed into products from batteries and stainless steel to buildings materials.

The government has argued that the decision was taken to encourage more investment in the development of smelters given that nickel miners will have to sell domestically. For big nickel miners that already operate smelter facilities, the policy will be positive in boosting their capacity. Smaller miners, however, said they would be negatively affected by the ban.

“What is the urgency [to speed up the nickel ore export ban]? Why doesn’t the government wait two more years? And who will compensate the smelter investments of local miners?” said Indonesia Nickel Miners Association (APNI) secretary-general Meidy Katrin on Tuesday, adding that such a move would jeopardize smelter investments made by local miners.

Local miners, she went on to say, often use their export quota as collateral for investors who help fund smelter development because banks are reluctant to finance the construction.

“We’re not ready yet, the government isn’t ready to provide infrastructure for smelter construction and there’s no adequate bank financing,” she stressed. “This regulation is issued just to kill national companies that build smelters.”

The Energy and Mineral Resources Ministry announced on Monday that it would ban nickel ore exports starting Jan. 1, 2020, two years earlier than the original plan.

The ministry’s coal and minerals director general, Bambang Gatot Ariyono, told the press that the ban of nickel ore exports was in line with the national plan to accelerate the establishment of smelters so that Indonesia could sell value-added nickel products such as stainless-steel slabs.

“We already exported 38 million tons up until July this year. At this rate, we would need to think about our reserves especially if we keep issuing export permits,” he said.

Bambang said the government hoped to accelerate the development of 25 ongoing nickel smelter constructions around the country to complement the 11 existing smelters, with combined input capacity of 81 million tons.

For companies that already have smelter facilities, the government’s move to accelerate the nickel ore export ban seemed to be a blessing in disguise.

Director of state-owned diversified mining company PT Aneka Tambang (Antam) Arie Prabowo Ariotedjo told The Jakarta Post on Tuesday that the short-term gain from the government’s move was that the company would enjoy a greater profit margin from selling nickel as its prices went up following the announcement of the ban.

According to the London Metal Exchange (LME), 3-month contracts for nickel were valued at US$18,620 per ton on Monday, a 4.3 percent increase from $17,850 on Aug. 30.

“Antam already produces nickel, it does not only sell nickel ore. In the coming months, we expect a greater margin from nickel while the exports of nickel ore until the end of the year will still be on track to reach its target,” said Arie.

Antam exported 3.9 million wet metric tons (wmt) of nickel ore in the first half, while its target in 2019 is to ship 5 million wmt.

The government’s policy would help narrow Indonesia’s current account deficit because it would encourage more value-added exports, adding that such a move would be a boon for other industries, Bahana Sekuritas economist Satria Sambijantoro said.

“There could be a windfall for Indonesia’s exports and nickel-utilizing industry, such as electric vehicles, as a result of the ban,” he added.


Source : https://www.thejakartapost.com/news/2019/09/04/small-miners-slam-govt-nickel-export-ban.html

Weekly News

Coal to Account for 67.8% of Indonesia's Energy Mix by 2022


It poses a problem on the government’s renewables push.

Indonesia may struggle to achieve the 23% target of having its primary energy needs come from renewable energy by 2023 as the share of coal in power generation is set to rise to 67.8% in 2022 from 60% in 2018, Moody’s Investor Service reported.

The share of renewables in the country’s energy mix is currently at 12%. Moody’s noted that there has been a lack of consistency in policy and regulatory framework, which has exacerbated the uncertainty associated with renewable energy projects.

The levelised cost of electricity (LCOE) for wind and solar as of June ranged around $84-187/MWh and $76-194MWh, respectively, compared to $56-94MWh for coal.

In addition, tariffs for renewable energy projects are fixed at 85% of the average tariff of power in each province. The country also requires the use of local components in these projects.

The slow adoption of renewable energy has also been attributed to the threat of stranded coal and oil-based generating projects of Perusahaan Listrik Negara, the largest generator and only off-taker for independent power projects in the country.

Power purchase agreements have also protected the two rated pure-play coal-based power projects, LLPL Capital and Minejesa Capital BV, from any changes to legal and environmental pollution standards

However, some banks and financial institutions have actively kept from incrementally lending to coal projects.

Indonesia has plans to add 50.4GW of new power generation capacity over the next decade, taking its installed capacity to 108GW.


Source : https://asian-power.com/regulation/news/coal-account-678-indonesias-energy-mix-2022

Weekly News

Indonesia Will Struggle to Meet 2025 Renewables Target: Moody's


Global rating agency Moody’s Investors Service believes Indonesia is unlikely to achieve its renewable energy target by 2025 and expects coal to continue to dominate the country’s energy mix over the next five to seven years.

Indonesia wants to derive 23 percent of the its primary energy needs from renewable sources, such as geothermal, solar and wind, within the next six years, from 12 percent currently.

But the government has been placing more focus on coal-fired power plants than on renewable sources, Moody’s said in a report published on Wednesday.

“Renewable energy faces many challenges in Indonesia. The key challenge is the evolving policy and regulatory framework, which has seen multiple changes over the years,” Moody’s wrote.

Wind and solar electricity costs are higher than coal-based power generation, which the government subsidizes. Also, tariffs are set at 85 percent of the average power tariff in each region for renewable energy projects, the agency said.

“The absence of a strong electricity grid on many Indonesian islands also makes it difficult to have large renewable energy projects,” it added.

The agency noted that state utility company Perusahaan Listrik Negara (PLN) is both the largest coal-based power generator and the sole electricity distributor in the country. Renewables would increase the risk of PLN’s coal- and oil-based power projects being abandoned.

“Another reason for the slow adoption of renewable energy is the concerns over falls in utilization rates for coal-based projects,” Moody’s said.

PLN’s energy mix consisted of coal (46 percent), gas (31 percent), diesel (14 percent), hydropower (8 percent) and geothermal (1 percent) in 2018.

This may protect coal-based power producers, which “are unlikely to suffer from sudden changes to carbon transition policy.”

They include LLPL Capital, which controls Lestari Banten Energi, an independent power producer with a 670-megawatt coal-fired power plant in West Java, and Minejesa Capital, which controls Paiton Energy in East Java, as well as PLN, Moody’s said.

“However, financing for new coal-based projects and refinancing for existing coal-based projects will face difficulty, as some banks and financial institutions have taken a policy decision to not lend to coal projects,” the ratings agency said.


Source : https://jakartaglobe.id/context/indonesia-will-struggle-to-meet-2025-renewables-target-moodys

Weekly News

Indonesian Miner Gets Fresh Export Quotas for Nickel Ore


Indonesian mining company PT Macika Mada Madana has obtained new export quotas of 400,000 wmt nickel ore this month, an SMM survey confirmed on Thursday September 5.

The miner halted shipments after its 1 million wmt nickel ore export quotas expired in March. Its monthly average shipment volume stands at 80,000 wmt.


Source : https://news.metal.com/newscontent/100969688/Indonesian-miner-gets-fresh-export-quotas-for-nickel-ore/

Weekly News

ANTAM, Jasindo and Indofarma Present Healthy Walk and Assistance of Basic Needs in Southeast Sulawesi


PT Aneka Tambang Tbk announced that the Company together with PT Asuransi Jasindo (Persero) (Jasindo) and PT Indofarma (Persero) Tbk (Indofarma) forming the ‘SOEs Present to the Nation program’ in Southeast Sulawesi Province, was held on August 18, 2019.

In 2019, the companies managed a series of activities, namely: the 74th Indonesia celebration ceremony, Fun Games, Fun Walk, Music Performance, Free Medical Treatment, and ANTAM’s Fostered Partner Exhibition. In addition, the companies also support basic needs donation such as low-priced food supplies, house renovations, toilet facilities construction, clean water facilities, and educational fund. The program also runs Indonesia Recognition by Students Program (SMN 2019). SMN is a student exchange program from Southeast Sulawesi Province and Bangka Belitung Province.

ANTAM’s President Director, Arie Prabowo Ariotedjo said:
“The SOEs Present for the Nation is an annual company program which initiates by the Ministry of State-Owned Enterprises (SOEs). This year, ANTAM appointed as the coordinator with Jasindo and Indofarma as the members. The SOEs synergy is expected to contribute the most suitable benefits for Indonesian society, especially in Southeast Sulawesi Province.”

The Director of ANTAM, Jasindo, and Indofarma together with Kolaka Regency Government, ANTAM’s employee and local communities attended the 74th Indonesia Independence Day ceremony on August 17, 2019, in Kolaka.

In addition, Pomalaa’s students perform the exceptional marching band and Malulo traditional dances. Consequently, they continued a series of traditional fun games, namely tug of war, slippery pole climbing, marbles racing, eat crackers games, bottle pencils games, and chain clothes games at Pomalaa.

On August 18, 2018, around 3,000 people joined in Fun Walk and music performance. The Company affords 1 unit of a motorcycle as a grand prize and 37 pieces of Logam Mulia gold bar as door prize. Those prizes are worth Rp50 million endured in Mekongga Small and Medium Industry Center (SIKIM) in Kolaka Regency.

Furthermore, the Company distributed 4,000 low-priced food supplies worth Rp100,000, which sold for Rp25,000 in food bazaar for Rp25,000. The bags distributed to Kolaka Regency, namely Tikonu Village Wundulako Regency, Pondouwae and Puudongi Village Polinggona Regency, Mataosu Ujung Village Watubangga Regency, and Rano Sangia village Toari Regency.

The low-priced food packages are contained of rice, sugar, palm oil, flour, salt, sardines, and milk. The trading result will be delivered to Corporate Social Responsibility (CSR) program to improve Islamic Boarding School facilities in Kolaka Regency.

Moreover, the Company also accommodated free medical treatment and exhibition for ANTAM’s Foster Partners, such as handicrafts and various culinary products. Besides this, the Company also run community support programs, namely 10 locations of house renovation, 150 toilet facilities, clean water support, as well as educational fund support for elementary, middle, and high school students with a total of 120 recipients from Kolaka District.

RECOGNITION BY STUDENTS PROGRAM (SMN 2019)

Twenty-three students from Southeast Sulawesi performed the Malulo traditional dance at the Opening Ceremony of Recognition by Students Program (SMN 2019) in Pangkal Pinang, Bangka Belitung, on August 15, 2019.

ANTAM, Jasindo, and Indofarma accommodate 20 students, three of them were disabilities, to visit Bangka Belitung Province. Earlier, ANTAM’s Director of Human Resources, Mr. Luki Setiawan Suardi had delivered a workshop about leadership to the students. Moreover, they also prepared with various skills such as traditional dance, journalistic training on August 13, 2019, in Kendari.

ANTAM’s Director of Human Resources, Luki Setiawan Suardi, said:
“You are the preferred Nation’s successors. Therefore you have to be gratified and maintain an excellent representation of your hometown while studying in Bangka Belitung. Hopefully, this program will run easily and increase the enjoyment of Indonesia diversity.”

Contrary to them, 23 participants from Bangka Belitung arrived in Southeast Sulawesi on August 16, 2019. The students visited the mine area, smelter, and Power Plant in ANTAM’s largest operations areas managing nickel mine and Indonesia’s first ferronickel processing plant.

The students had followed the selection process on 25-26 July 2019. The Southeast Sulawesi Education Office select thousands of high achievement and disadvantaged students from 17 regent/cities in Southeast Sulawesi.

The participants studied several topics, namely entrepreneurship through ANTAM’s Foster Partners, arts and culture, outbound & state defense (Bela Negara) training, scientific writing & e-commerce workshop, and also tourism in Kendari.

The series of SMN 2019 activities had operated until August 24, 2019 in Kendari. “Siswa Mengenal Nusantara” is one of SOEs Present for the Nation program which initiated by the Ministry of SOEs. The program intends to enhance the sense of pride and appreciation to Indonesia since a young age, especially in high school/vocational/extraordinary high school students.


Source : http://www.antam.com/index.php?option=com_content&task=view&Itemid=144&id=1130

Weekly News

Chinese Nickel Demand Impacted by Indonesian Ban on Nickel Ore Exports


Nickel prices have been rising in the past 2 months due to the news of the earlier ban on raw ore exports from Indonesia, and the Indonesian government finally decided to implement the policy ahead of schedule.

The Ministry of Energy and Mineral Resources of Indonesia (ESDM) said that the ore with a nickel content of less than 1.7% will be no longer allowed to be exported after the export ban was in force after January 1st, 2022, and the unused quota cannot be used anymore.

China has insufficient nickel ore sources to meet the overall demand although it is the largest nickel consumer in the world. Therefore, China has great dependence on imports from the Philippines and Indonesia basically. Especially Indonesia, one of the important nickel ore suppliers for China, will easily affect nickel prices due to its changeable policy.


Source : https://yieh.com/en/NewsItem/107761

Weekly News

Indonesia Penalises Laggard Construction of Smelters before 2020 Ore Export Ban


The Energy and Mineral Resources Ministry (ESDM) of Indonesia announced means of punishment for smelters that progress slowly in their facilities construction, according to a decree released and effective on August 26.

The move aims to accelerate the establishment of domestic smelters, as ESDM will stop exports of nickel ore of all grades from January 1, 2020, two years earlier than initially indicated. Any unexpired quota or newly-approved one during the rest of this year will be invalid by the end of December.

Indonesian smelters engaged in export business that fail to meet 90% of the construction progress as scheduled, in every six months, will face potential export suspension and an administrative fine of 20% of the cumulative mineral export sales during the past six months.

The smelter’s license will be revoked if the smelter is unable to pay the fine during a provisional 60-day period.


Source : https://news.metal.com/newscontent/100969608/Indonesia-penalises-laggard-construction-of-smelters-before-2020-ore-export-ban/

Weekly News

Nickel Is Hotter than Gold Right Now


Indonesia has declared that they will ban nickel ore exports as of January 1st, 2020 (previously scheduled for 2022). On Monday, September 2, 2019, Indonesia’s Energy and Mineral Resources Ministry confirmed plans to move the ban up and place it ahead of schedule. Indonesia currently accounts for about 27-28% of global nickel ore supply. Nickel prices surged higher on the news.

Nickel’s price surge – up over 50% in the past 3 months, up 10% in the last week

Nickel Price Surge graphic

Indonesia’s Coal and Minerals Director General Bambang Gatot Ariyono stated: “The government decided, after weighing all the pros and cons, that we want to expedite smelter building. So we took the initiative to stop exports of nickel ores of all quality.”

Indonesia will soon have 36 smelters, and if exports were to continue there would have been only enough reserves for seven to eight years. These smelters can process low-grade nickel ores and they can be used for batteries to help Indonesia meet its electric-vehicle goals. Bambang continued: “We already exported 38 million tons up until July this year. At this rate, we would need to think about our reserves especially if we keep issuing exports permits.”

Put simply, Indonesia has long wanted to encourage investments within Indonesia that can value-add to their nickel ore. The end game would be for Indonesia to be able to produce their own finished nickel, stainless steel, and lithium-ion batteries (NMC batteries require plenty of nickel).

Nickel supply by country

Nickel Supply by Country

Other sources of nickel supply

The Philippines has maintained its position as a top nickel ore producer and exporter for approximately a decade. Even though Indonesian ore was generally of a higher grade than ore from the Philippines, nickel miners in the Philippines will try to boost ore production next year when the Indonesia export ban kicks in. The Philippines has 29 nickel mines and two nickel processing plants. However strict environmental law changes in the Philippines in recent years have reduced their nickel supply. Also, it is said that many Chinese buyers prefer higher-grade ores from Indonesia. Current Philippine nickel ore production has dropped to about 340,000 tonnes in 2018, due to the closure of 23 mines as the government seeks to curb environmental damage from mines in the Philippines.

Perhaps the boost will come from New Caledonia, Russia, Australia, Canada, and some contributions from the new Indonesian smelters. But will this be enough?

Nickel demand looks set to increase boosted by electric vehicles

All experts agree that the demand for nickel sulphate is set to go through the roof as electric vehicles (EVs) take off. Demand for nickel in the EV space is expected to reach 350,000-500,000 tonnes by 2025.

Final thoughts

No doubt new sources of nickel will start to fill the supply gap that Indonesia will leave, but this takes time. Indonesia will also step up it’s processing of ores, but this will take several years to raise capital and then build out the processing plants. Many companies that halted nickel sales due to the recent bear market years for base metals will start to come back online, as will new nickel projects assuming the nickel price stays strong. Will we see nickel over USD 10/lb in 2020? Yes, I would say this is very possible, as with most severe supply disruptions the industry usually takes a couple of years to catch up.

The top global nickel producers are Vale, Norilsk Nickel, Jinchuan International Group Resources, Glencore, and BHP Group. Some nickel developers to consider include RNC Minerals and Ardea Resources. And some nickel explorers include Canada Cobalt Works Inc. (TSXV: CCW | OTCQB: CCWOF), New Age Metals Inc. (TSXV: NAM | OTCQB: NMTLF), Noble Mineral Exploration Inc. (TSXV: NOB) and Searchlight Resources Inc. (TSXV: SCLT).

For investors, it has been a great past week for the nickel miners, but the best may be yet to come.


Source : https://investorintel.com/sectors/gold-silver-base-metals/gold-precious-metals-intel/nickel-is-hotter-than-gold-right-now/

Weekly News

Tin Prices Jump as China, Indonesia Smelters Flag Output Cuts


Tin prices jumped in Shanghai and London on Thursday after some of the world’s top refined tin producers said they would cut production this year following a recent slump in prices for the metal.

In total, producers including the world’s top two – China’s Yunnan Tin and Indonesia’s PT Timah – will reduce production by around 30,000 tonnes this year.

Estimates of global tin supply this year previously ranged mostly between 350,000 and 380,000 tonnes, meaning around 8% of supply is coming out of the market.

A group of 14 Chinese smelters, led by Yunnan Tin, said they had agreed to cut a total of 20,200 tonnes of output this year.

They made the announcement at an International Tin Association (ITA) conference in the Chinese city of Xian on Thursday, after a meeting the previous day.

PT Timah will cut an estimated 10,000 tonnes from an earlier annual production target of 60,000-70,000 tonnes for this year, Company Secretary Abdullah Umar Baswedan told Reuters in a text message.

“The number is not definitive yet” but is part of efforts to manage supply, Baswedan said.

Timah’s President director Mochtar Riza Pahlevi Tabrani was attending the conference in Xian.

Shanghai tin prices, which hit a three-year low of 127,700 yuan ($18,004.17) a tonne as recently as Aug. 26 amid weak demand in China, rose as much as 4.8% to 145,090 yuan, the highest since June 19, on Thursday before closing at 142,890 yuan.

Benchmark three-month tin on the London Metal Exchange climbed as much as 3.1% to $17,740 a tonne, the highest since July 26, before easing to $17,330 as of 1139 GMT.

The Chinese group “will take other necessary measures to safeguard the healthy development of the tin industry,” according to their statement, seen by Reuters.

Yunnan Tin is the world leader with 77,789 tonnes of output in 2018 – more than twice as much as PT Timah – according to the ITA.

In a separate stock exchange filing, Yunnan Tin said its 2019 refined output “will be reduced by about 10% compared with the annual production plan” as part of a joint initiative in response to tight supply of tin ore.

While tin prices have fallen this year due mainly to weak demand in China as its economy slowed, reduced availability of tin ore has also led to production cuts by smelters.

A company official, who asked not to be identified, said Yunnan Tin would cut about 7,000 tonnes of annual output. A Yunnan Tin spokeswoman was unable to confirm the number.

The group of 14 also included China’s Yunnan Chengfeng, which ranked fourth globally with 22,900 tonnes of output last year, as well as Jiangxi New Nanshan Tin and Guangxi China Tin.


Source : https://www.reuters.com/article/us-china-metals-tin/tin-prices-jump-as-china-indonesia-smelters-flag-output-cuts-idUSKCN1VQ0CP

Weekly News

ANTAM Receives the Top 5 Social Business Innovation Company Award 2019 in the Mining Category


PT Aneka Tambang Tbk (ANTAM; IDX: ANTM; ASX: ATM) is pleased to announce that the Company received the Top 5 Business Social Innovation Company Award 2019 in the Mining Category from WartaEkonomi.co.id. The award was held on August 29, 2019 at Balai Kartini, Jakarta, which was attended by the Minister of Industry of the Republic of Indonesia, Mr. Airlangga Hartarto.

ANTAM’s President Director, Arie Prabowo Ariotedjo said:

“ANTAM continues to be committed to empowering the people and the environment around the Company’s operational areas. This award is a reflection of good corporate governance and implementation of corporate social responsibility.”

The theme of award is “Contribution to Sustainable Development Goals.” This award aims to appreciate the leading companies in Indonesia that have succeeded in innovating companies in overcoming social and environmental problems through corporate social responsibility programs in the period 2018-2019.

WartaEkonomi.co.id Research and Consulting established ANTAM as the winner of the award after the selection phase, namely (1) Companies operating in Indonesia, (2) Having a priority on Corporate Social Responsibility program, (3) Compliance with government regulations related to the environment. The assessment indicators that are considered are organizational governance, the environment, and community involvement & development.


Source : http://www.antam.com/index.php?option=com_content&task=view&Itemid=144&id=1131

Weekly News

Adaro Energy Increases Production and Sales Volume to Improve Its Performance


PT Adaro Energi Tbk (ADRO) keeps trying to improve its performance by increasing production and sales volume.

Head of Corporate Communication at PT Adaro Energy Tbk, Febriati Nadira said that in order to maintain sales performance, Adaro continues to take advantage of the current high demand for coal by increasing production and sales volume. “We are also diversifying our market,” he said as quoted by Kontan.co.id, Wednesday (4/9).

He added that the effort to improve the company’s sales performance including the diversification of the coal market to export markets such as Europe, Japan, China, India, South Korea and Southeast Asia and by continuing to consistently provide a reliable supply.

In the first semester of 2019, ADRO had succeeded in producing 28.48 million tons of coal. This figure is 18% higher than the record from the same period last year. This year, ADRO is targeting coal production of 56 million tons.


Source : https://www.idnfinancials.com/news/28311/adaro-energy-increases-production-sales-volume-improve-performance

Weekly News

Flip-flopping Nickel Policy


The objective of the Mining Law, enacted in the 2009 election year, is noble as it is designed to increase the value of minerals through processing. But the way the law has been enforced with such lack of clarity and certainty only damages the credibility and reliability of the government’s policy-making capacity.

The government, apparently disappointed with slow progress in the construction of many nickel smelters, revealed early this week a plan to entirely stop exports of raw nickel (ore) as of January 2020 — two years before originally scheduled.

The export ban also seems necessary to ensure that nickel reserves remain adequate to supply smelters that are already operating and those still under construction, because raw nickel exports reached 38 million tons in the first half of this year alone, while proven reserves are currently estimated at only 698 million tons. According to the Energy and Mineral Resources Ministry, as of this year, 11 smelters are already in production and 25 are still under construction. These plants will need 80 million tons of nickel ore a year.

The 2009 Mining Law actually requires a total export ban on nickel ore and all other raw minerals, including copper and bauxite, by January 2014. But the law virtually remained on the shelf for almost three years due to the delayed issuance of implementation regulations by related line ministries. This led mining companies to believe that the government was not serious about the export ban policy.

But the government was forced to reschedule the smelting policy in early 2014, and raw nickel exports were allowed again as a total export ban, as required by the law, would have had an adverse impact on state revenues and export earnings and might have caused massive worker layoffs.

Then in early 2017, the policy was tightened with tough requirements to force nickel miners to build smelters, but the total export ban was rescheduled to January 2022. Mining firms were given export quotas according to the progress of their smelter projects.

The planned acceleration of the export ban was certainly met with negative responses from companies that are still building their smelters, as they will no longer gain revenues from raw nickel exports. But mining firms that have completed their smelters greatly welcome the policy change as they are assured of adequate nickel-ore feedstocks for decades ahead.

Nevertheless, such intermittent policy changes are especially damaging to investment in the mineral refining industry, which requires big investment, not only for the smelter alone but for high-capacity power generation. The huge electricity need is even more challenging because nickel smelter projects are located in Kalimantan and Sulawesi, which are still acutely short of basic infrastructure, notably power.

As Indonesia supplies more than 20 percent of the global nickel market, the country will certainly benefit greatly from the compulsory domestic refining of raw nickel, especially given the increasingly crucial role of nickel as a main basic material for car batteries. But policy flip-flopping does not bode well for the credibility of government policy.


Source : https://www.thejakartapost.com/academia/2019/09/06/flip-flopping-nickel-policy.html

Weekly News

METALS-Shanghai Tin Dips But Posts Record Weekly Gains on Output Cuts


Shanghai tin slipped on Friday but posted its best week on record, while prices in London were on course to post their best weekly gain in more than three years, bolstered by production cuts by major producers.

Some of the world’s top refined tin producers have unveiled production cuts following a recent slump in prices.

Producers including the world’s top two – China’s Yunnan Tin and Indonesia’s PT Timah – plan to reduce production by around 30,000 tonnes this year, meaning about 8% of estimated supply this year could come out of the market.

The most traded tin contract on the Shanghai Futures Exchange (ShFE) rose 10% this week, its highest weekly gain on record, despite ending down 1% on Friday.

Benchmark tin on the London Metal Exchange (LME) declined 1.3% to $17,220 a tonne by 0714 GMT, but still up 5.3% so far this week, on course for its best week since March 2016.

FUNDAMENTALS
* COPPER: London copper was rising 2.5% so far this week, its best since June, while Shanghai copper rose as progress after China and the United States agreed to hold high level trade talks, reviving hopes for an end to a prolonged dispute.

* PRICES: ShFE copper rose 1%, aluminium advanced 0.3%, while nickel dropped 4.3%. LME copper eased 0.4%, aluminium dipped 0.4%, zinc dropped 1%, while nickel fell 0.5%.

* NICKEL: “Indonesia government announced that miners can seek new export quotas, which will be valid until the end of the year. This is likely to result in a surge in exports of nickel ore ahead of the planned ban on 1 January 2020,” said ANZ.

* INDONESIA: Indonesia on Thursday released a decree allowing new exports quotas to be issued but only for validation until the end of this year.

* NICKEL MINER: Poseidon Nickel Ltd, buoyed by a recent surge in nickel prices, said on Friday it would restart operations at its Black Swan project in Western Australia.

* ZINC: Goldman Sachs analysts in a note estimated large surpluses for the global zinc market in 2020 and 2021, after global balance moved to surplus in 2019 following three big years of deficits.

* LYNAS: Australian rare earths producer Lynas Corp said it signed an agreement with the outback town of Kalgoorlie to explore a potential initial ore processing site as it tries to soothe concerns in Malaysia about radioactive waste.


Source : https://www.reuters.com/article/global-metals/metals-shanghai-tin-dips-but-posts-record-weekly-gains-on-output-cuts-idUSL3N25X10N

Weekly News

PT Timah Prepares Rp 200 Billion to Build a Rare Earth Plant


PT Timah Tbk (TINS) will soon build a rare earth mineral processing plant in the Bangka Belitung Islands. The construction of this factory will cost Rp 100 billion-Rp 200 billion.

Corporate Secretary of PT Timah Tbk (TINS), Abdullah Umar said the construction of the plant would begin in the third quarter of 2019.

The processing facility will separate the rare earth metals and uranium or thorium from monasite minerals which are by-products in tin ore mining. The result is a rare earth metal compound in the form of a carbonate compound.

To build this facility, TINS has prepared a budget of Rp 100 billion to Rp 200 billion. The funds came from the issuance of bonds and sukuk that was held by TINS recently.

Last month (16/8), PT Timah Tbk issued bonds worth Rp 1.19 trillion, consisting of bonds (Rp 880 billion) and sukuk (Rp 313 billion).


Source : https://www.idnfinancials.com/news/28350/timah-prepares-build-rare-earth-plant

Weekly News

Indonesia Nickel-ore Export U-turn Throws Up Investor Red Flag: Analysts


Indonesia’s surprise plan to roll out a nickel-ore export ban two years early could scare foreign investors away from Southeast Asia’s biggest economy, analysts say, as it cements a reputation for policy flip-flops.

Nickel prices soared this week on supply concerns after Indonesia, the world’s top producer, announced the ban would start next year instead of 2022 in a bid to process more minerals at home.

Ending exports of bauxite, used to make aluminium, and copper concentrates is still slated for 2022.

The sprawling archipelago has some of the world’s most abundant natural resources. But critics say it repeatedly comes up with poorly thought-out and nationalistic economic policies that make it an uncertain place to invest.

“This decision casts huge doubt in people’s minds about the reliability and consistency of Indonesian government policy,” said Bill Sullivan, a Jakarta-based lawyer and mining expert.

“It’s just a wonderful example of something that plays to the very worst fears of foreign investors… Changing at the drop of a hat and without warning,” he added.

The sped-up timeline has also alarmed some Indonesian miners who thought they had more time before the ban came into effect.

Indonesia implemented an ore export ban in 2014 only to reverse course and relax it in 2017, when the government said companies would have five years to prepare and start building homegrown smelters — which extract base metals from ore.

“There have been so many U-turns it would make your head spin,” Sullivan said.

Indonesian officials said they want to speed up construction of smelters to churn out higher-value products, rather than just shipping raw ore abroad — including to top importer China which uses nickel to make stainless steel.

The move is also key for plans to turn the country into an electric-vehicle hub. Nickel is used in lithium batteries that power gas-free cars.

“The government wants to become a global player and enter the lithium battery supply chain given the raw materials Indonesia has,” Luhut Pandjaitan, coordinating minister overseeing mining, said this week.

– ‘Think twice’-
Some foreign firms are investing in nickel-battery processing plants in Indonesia, including China’s Tsingshan Holding Group, while construction is underway on some two dozen domestic smelters, according to the government.

“Accelerating the export ban is a good thing,” said Marwan Batubara, executive director of think tank Indonesian Resources Studies.

“We need to maintain our stocks for domestic needs. Many factories and smelters won’t have enough raw materials otherwise.”

But some foreign miners, including US-based Newmont, have been turning away from Indonesia in recent years, as it pushed overseas firms to comply with new ownership rules designed to give the country more control of its plentiful resources.

Last year, Indonesia finalised a deal with US mining giant Freeport-McMoRan to take a 51 percent stake in Grasberg, site of the world’s biggest gold mine, after years of bitter negotiations. Freeport continues to operate the giant gold-and-copper facility in easternmost Papua.

“This is not favourable for foreign investment,” Sabrin Chowdhury, a senior commodities analyst at Fitch Solutions in Singapore, said of the latest move, adding that previous government policies had forced “a lot of foreign miners leave”.

Switching to higher-value mining exports could help plug a gap in Indonesia’s trade balance, as it courts automakers to invest in electric-vehicle facilities, including Toyota and Korea’s Hyundai.

The very immediate implication is that nickel prices are soaring and this benefits local miners,” Chowdhury said.

“Indonesia is the world’s largest producer of nickel ore which is used extensively in EV batteries so it makes sense to invest in the country if you are an electric-vehicle maker.

“But considering how uncertain Indonesian politics is, if I were an investor I’d think twice.”

While the ban may help boost the economy as president Joko Widodo kicks off a second term, it also threatens to scare away firms in capital-intensive industries that may be eyeing investments in Indonesia, Sullivan said.

“The irony is that is precisely the kind of industry that Indonesia is trying to attract.”


Source : https://coconuts.co/jakarta/news/indonesia-nickel-ore-export-u-turn-throws-up-investor-red-flag-analysts/

Weekly News

Indonesia’s Steel Producer Gunung Raja Paksi to Raise $78m via IPO


Indonesia’s steel producer Gunung Raja Paksi is planning to raise up to $78 million (Rp 1.12 trillion) in an initial public offering (IPO) at Indonesia Stock Exchange (IDX) in September, the company announced on Tuesday.

Established in 1990, Gunung Raja’s areas of work include steel smelting, furnace, and steel rolling. The Jakarta-based company has a production facility in Cikarang, West Java, which is built across 200 hectares. It has an annual production capacity of around 2.8 million tons.

The company also exports its steel to the US, Philippines, Malaysia, and Australia. It booked $212.13 million in sales last year, down 15.18 per cent from the year before.

“We see great potential in this industry, which comes from the growth of steel consumption in Indonesia due to the government’s massive infrastructure development in building toll roads, ports, airports, and railroads,” Gunung Raja Paksi chief executive Alouisius Maseimilian said in a statement.

Maseimilian also said Indonesia’s steel industry has room to grow since steel consumption in the country is low, while steel production capacity is modest.

The company is offering 1.24 billion new shares, equivalent to 10.21 per cent of its enlarged capital. Gunung Raja is looking to offer shares at Rp 825 and Rp 900 apiece.

The book-building period started on 3 September and will last till September 5, before it sells its shares to investors on September 12-13. The company will list its shares on the IDX on September 19.

Two local-based brokerage firms Kresna Sekuritas and UOB Kay Hian Sekuritas have been appointed as the underwriters for the IPO


Source : https://www.dealstreetasia.com/stories/gunung-raja-paksi-ipo-152512/

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

Mining People on The Move

Gulf Manganese Corporation – Building A Successful Indonesian Smelting Business


The developer of premium Indonesian Manganese Alloys, Gulf Manganese Corporation Limited (ASX: GMC) has appointed highly experienced Mr. Ian Gregory as Company Secretary, as per the latest update on ASX.

Mr. Ian Gregory is a professionally well-connected Director and Company Secretary with more than 30 years of experience in the provision of company secretarial and business administration services. He has previously served as Chairman of the Western Australian Branch Council of Governance Institute of Australia.

On Education front, he has a Bachelor of Business degree from Curtin University and is a Fellow of the Governance Institute of Australia, the Financial Services Institute of Australia as well as a Member of the Australian Institute of Company Directors.

Earlier, Mr. Robert Ierace was serving as Company Secretary; however, due to increasing finance and governance requirements, the company made a decision to separate the finance and secretarial roles in order to strengthen the company’s professional resource base. Consequently, Mr. Robert Ierace is retiring from the position of Company Secretary to focus on his role as Chief Financial Officer.

Gulf to Acquire Strategic Interest in Iron Fortune Pty Ltd

Gulf Manganese Corporation recently made a strategic step to diversify its asset base beyond Indonesia by entering into an agreement to acquire a strategic 20% interest in Iron Fortune Pty Ltd. This is expected to provide Gulf with a first to market exploration opportunity in Timor-Leste. As per the Gulf, Iron Fortune’s strong local relationships and geological knowledge of the region will help the company in growing manganese footprint outside of Indonesia.

To acquire the 20% interest, the company will have to make an initial payment of A$100k for exclusivity while the due diligence process is completed. Both the companies have agreed for coordination in order to develop a work plan and strategic direction. And once the due diligence process is finalised, the company will pay a further A$200k and issue shares worth A$100k; and Iron Fortune will issue Gulf a 20% stake.

As per the financial terms, Gulf will also commit to spending A$300k on the Business by 31 August 2020, and a further $300k in the following 12 months to earn 35% and then 51% interest in Iron Fortune. Once the 51% interest is earned, Gulf will complete a mining study and reach a decision to mine to earn a further 29% interest for a total of 80%. After which, the current shareholders of Iron Fortune will have the right to fund the mining and development costs on a pro-rata basis. In case, Gulf completes the acquisition to 100% of Iron Fortune, the current shareholders will receive a 2.0% Net Royalty on Profit.

As per terms of the agreement, Hamish Bohannan will be appointed Non-Executive Director of Iron Fortune Board.

The company’s management believes that this partnership can significantly de-risk the Gulf’s ore supply chain and help it in expanding its high-quality manganese mining footprint and processing capabilities. It is believed that this will help in the development of Gulf’s Kupang Smelting Hub facility.

Kupang Smelting Hub Financial

The agreement is subject to various conditions, which include:

  • Gulf undertaking and completing its Due Diligence on Iron Fortune;
  • Gulf Board approval;
  • Gulf receiving the necessary regulatory approval (if required);
  • Confirmation that the Business is in good standing and fully compliant with respect to TimorLeste law and regulations.

Review of Company’s Operations

In the June quarter, the company made substantial operational progress with several key milestones achieved, including the securing of the Company’s Direct Shipping Ore (DSO) licence in May 2019.

In the month of May, the Company’s Indonesian subsidiary, PT Gulf Mangan Grup (GMG) received its Direct Shipping Ore Licence from Indonesia’s Ministry of Trade, allowing GMG to export up to 103,162 tonnes of high-grade manganese ore per year.

During the quarter, key management personnel attended the Vienna’s International Manganese Institute’s (IMnI) annual conference.

Recently, the company vended High-Grade Timorese manganese mine, Putra Indonesia Jaya (PIJ) to its key Indonesian and Singaporean partners and announced its intention to supply the 100% of the ore produced from this mine to Gulf’s operations in Kupang. It is expected that ore supply from the mine will commence in the month of September 2019. By the first quarter of calendar year 2020, the ore supply is expected to increase to around 2,000 tonnes per month.

During the quarter, the company successfully raised A$3.24 million by issuing ~647.20 million shares at $0.005 per share. The company has also agreed to place further 45 million shares at an issue price of $0.007 to Acuity Capital for a total of A$0.32 million in accordance with the Controlled Placement Agreement with Acuity announced on 31 January 2018. As per the company, the funds received from the placements will be used to advance preparations for DSO start-up and for general working capital purposes.

Cash Flow Position

During the June quarter, the company spend $679k of cash on development activities, $485k on staff costs and $624k on administration and corporate costs. The total net cash used in operating activities during the June quarter was around $1.79 million. The net cashflow from investing and financing activities during the quarter was $92k and $5,220k respectively.

The total estimated cash outflows for September quarter is around $1.7 million which includes around $980k to be spent on development, $450k to be spent on staff costs and $280k to be spent on administration and corporate costs.

Outlook

By ramping up DSO exports over the coming months, the company intends to utilize the generated cash to finalise the commissioning of first two smelting hub furnaces at Kupang, which remain on-track for completion in the first quarter of next year. The company is also advancing discussions with debt funding providers and potential offtake partners to expedite this construction process.

Stock Performance

At the time of market close on 5th August 2019, GMC’s stock was trading at a price of $0.007 with a market capitalisation of circa 34.56 million.


Source : https://kalkinemedia.com/2019/08/05/gulf-manganese-corporation-building-a-successful-indonesian-smelting-business/

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