Indonesia Mining Report Q3 2016

Date: September 3, 2016
Pages: 85
US$ 1,295.00
Report type: Strategic Report
Delivery: E-mail Delivery (PDF)
ID: IB30446D15FEN

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Includes 3 FREE quarterly updates

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

Latest Developments & Structural Trends
  • We expect the Indonesian government will push ahead with its February 2016 proposal to revise the country's mineral ore export ban by September 2016 as expected investment in the downstream sector has not materialised. The bauxite sector will benefit most from the relaxation of the ban, as the sector registered poor smelter construction and the greatest loss in revenues as a result of the ban. We expect our current production forecasts to face upside risks due to the impending ban moderation.
  • We forecast bauxite production growth in Indonesia to register an annual average of 148.2% during 2016-2020, mainly because of acceleration in production in 2016 of 600% due to China Hongqiao Group Limited's smelter facility coming online. Hongqiao will initially produce one million tonnes per annum of aluminium, doubling capacity by 2017. One tonne of aluminium requires approximately five tonnes of bauxite to produce. Contrary to numerous smelter project proposals in 2014 and our past expectations on high smelter investment from China, smelter investment for bauxite has been stagnant as a result of low prices and lack of funding. In March 2016 Hongqiao started trial runs in its new alumina smelter in Indonesia, adding to the only other smelter in the country, PT Indonesia Chemical Alumina, a subsidiary of diversified local miner PT Antam.
  • We expect Indonesia's coal production to fall by 15.0% to 314 million tonnes in 2016, followed by subdued growth henceforth to 2020, registering an average annual growth of 3.0% per annum during 2016-2020. Over the long term, despite the one time fall in domestic production due to the crackdown on illegal mining in 2015, we believe output will be supported by strong demand from a domestic pipeline of coal-fired power plants. Although emerging economies like the Philippines will continue to rely on Indonesian coal for power generation, a spate of piracy incidents in the last few months attacking Indonesian ships will undermine shipments in the upcoming quarters. Additionally, India's ramping up of domestic coal production will eventually reduce the country's reliance on Indonesian coal imports in the coming years.
BMI Industry View
  Table: Indonesia - Mining Industry Value Forecast (2012-2020)
Latest Developments & Structural Trends
Industry Forecast
Bauxite: Hongqiao To Drive Growth
Latest Developments
  Table: Bauxite Production Forecast (Indonesia 2012-2020)
  Table: Indonesia - Major Bauxite Project
Structural Trends
Nickel: Strong Growth Ahead
Latest Developments
  Table: Nickel Production Forecast (Indonesia 2010-2020)
  Table: Indonesia - Select Nickel Projects
Structural Trends
Coal: Domestic Demand To Drive Growth
Latest developments
  Table: Coal Production Forecast (Indonesia 2012-2020)
  Table: Indonesia - Select Coal Projects
Structural Trends
Copper: Steady Growth Ahead
Latest Developments
  Table: Copper Production Forecast (Indonesia 2012-2020)
  Table: Indonesia - Major Copper Projects
Structural Developments
Grasberg To Drive Output Growth
Tin: Environmental Regulations To Slow Growth
Latest Developments
  Table: Tin Production Forecast (Indonesia 2012-2020)
  Table: Indonesia - Major Tin Projects
Structural Trends
Industry Risk Reward Ratings
Risk/Reward Index
Industry Rewards
Country Rewards
Industry Risks
Country Risks
Asia Risk/Reward Index
Key Takeaways
Latest Revisions
  Table: Asia - Mining Risk/Reward Index
Regulatory Development
Key Developments
Ban Moderation On The Horizon
  Table: Indonesia - Export Restrictions On Select Commodities
The 2009 Mining Law
Trade & Investment Risk Analysis
Commodities Forecast
Commodities Outlook
  Table: BMI Commodities Price Forecasts
Competitive Landscape
Key Players
  Table: Financial Data For Key Mining Firms Listed In Indonesia
Company Profile
PT Antam
  Table: PT Antam - Key Financial Data
PT Bumi Resources
  Table: Bumi Resources - Key Financial Data
PT Indo Tambangraya Megah Tbk (ITMG)
  Table: ITM - Key Financial Data
PT Timah
  Table: PT Timah - Key Financial Data
Freeport-McMoRan - Q3 2016
  Table: Select Commodities - Price Forecasts
  Table: Freeport McMoRan - Key Financial Data
Regional Overview
Asia Overview
Slowing Iron Ore Production
Indian Coal Consumption To Outperform
China & India To Lead In Outbound Investment
Indonesian Ban Moderation Ahead
Chinese Coal & Steel Sectors To Consolidate Slowly
Industry Forecast Methodology
Risk/Reward Index Methodology
  Table: Weighting Of Indicators
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