REPUBLIK INDONESIA

OPPORTUNITIES AND CHALLENGES IN

MINERAL RESOURCES

MINISTRY OF ENERGY AND

MINERAL RESOURCES
REPUBLIC OF INDONESIA

CONTENT
I. BACKGROUND
II.CURRENT CONDITION
III.MINING REGULATION
IV.INVESTMENT POLICY AND
OPPORTUNITY
V.CLOSING REMARKS

I. BACKGROUND
1. Indonesia has abundant mineral and energy resources that can be utilized to raise peoples welfare
in the form of job, education, and other economic and social benefits. This condition can not be
achieved without investment in various sectors of development including mineral and energy.
2. Geographically the country has a comparative advantage, which is situated between Asia and
Australia continents, causing lower shipment cost of transportation for Asia market compared with
Australia and African resource-rich countries.
3. Complying with the States constitution, the Government should increase benefits of its resources,
including enhancement of mineral and energy value added to diversify more valuable products of
processed minerals. Diversification of products through processed and refined minerals will reduce
negative impact from volatility of commodity price, and at the other side it will absorb more people
in workforce.
4. The new Mining Law No. 4/2009 mandates the Government to manage the resources through
conserving and increasing value added of mineral and energy for the purpose of creating
sustainable economic development.
5. There is a large and open opportunity in investing not only in mining but also in processing of
mineral and energy sources in Indonesia.

MINERAL RESOURCES AND

RESERVES

NO COMMODITY

Ferro and Associates

: Fe, Nickel, Cobalt, Chromit ,
Mangan, Molibdenum, Titanium
Precious Metal
: Gold, Silver, Platinum
Base Metal
: Zinc, Cupper, Tin, Lead, Mercury
Light and Rare metal : Bauxite, Monasit

RESOURCE (TONNES)
ORE

METAL

RESERVE (TONNES)
ORE

METAL

Primary Gold

8.357.714.559,00

7.454,98

Bauxite

1.347.638.206,68

648.479.376,64

585.721.415,00 239.598.060,2

Nickel

3.711.588.997,00

54.449.501,35

1.155.234.951,40 21.378.312,61

Copper

18.284.523.144,94

108.698.062,96

Iron Ore

712.464.366,32

401.771.218,67

Iron Sand

2.121.476.550,10

443.732.971,69

173.810.612,00

Manganese

15.557.048,77

6.305.298,42

4.429.029,00

2.834.916,25

Zinc

670.658.336,00

7.487.775,86

19.864.090,90

2.274.982,50

Tin

3.945.572.597,87

2.349.989,64

1.322.471.947,00

10

Silver

14.468.642.881,00

837.949,53

15.114.023.114,43

2.807.161.814,13

2.719.650.376,80

2.575,22

25.603.197,33

65.579.511,00 39.825.354,30

25.412.652,63

281.956,00

1.949.989,05

Source : Geology Agency, MEMR, 2014

Indonesia Coal Resource and Reserve

COAL RESOURCE
COAL RESERVE

: 124,79 Billion
: 32,38 Billion

Very High ( > 7.100

kal/gr
High )
( 6.100 7.100 kal/gr )
Medium
Low

( 5.100 6.100 kal/gr)

( < 5.100 kal/gr )

Source : Geology Agency ,2014

MINERAL AND COAL ENTERPRISES

STATUS

TOTAL
TOTAL
CoW
CoW
==
41
41
CCoW
CCoW ==
75
75
IUP
IUP
== 10.922
10.922
IUP
IUP (METALLIC
(METALLIC MINERAL)
MINERAL)
== 4.474
4.474
IUP
IUP (NON
(NON METALLIC
METALLIC &
& ROCK)
ROCK) == 2.526
2.526
IUP
IUP (COAL)
(COAL)
== 3.922
3.922

Chinas Investment Realization in Indonesia 2009 - 2014

CHINAS INVESTMENT REALIZATION IN
INDONESIA 2009-2014 (RP. BILLION)

BIG 15 FDI TO INDONESIA 2009 - 2014

Project Investment Rank
s
(Rp.
Billion)

Singapura
3.617 252.183,2
1
Japan
2.237 121.388,5
2
South Korea
2.277
73.324,8
3
USA
527
70.998,7
4
Netherland
608
57.964,3
5
British Virgin
726
Islands
46.475,3
6
England
608
33.559,4
7
Malaysia
1.312
28.106,9
8
Mauritius
114
27.391,8
9
Australia
659
18.394,6
10
Hong Kong, RRC 520
17.598,6
11
Taiwan
441
15.559,2
12
R.R.China
943
9.308,9
13
Swiss
153
7.413,0
14
Seychelles
Sources: BKPM, 2014

70

6.786,0

15

Sources: BKPM, 2014

BIG 5 SECTORS CHINAS INVESTMENT TO

INDONESIA 2009-2014
Sectors

1 Mining
Metal Industry, Metal Goods,
2
Machine, and Electronic
3 Trade and Reparation
4 Food Industry
Industrial Rubber, Rubber and
5
Plastic Goods

Projetc
s

Realizatio
n
(Rp.
Billion)

230

3168,1

125

1948.,8

320
46

945,3
680,6

15

535,2

Indonesia Investment Coordinating Board

INDONESIAS MINERAL AND COAL

INVESTMENT
(Million US$)
5.793,40
4.801,17
4.373,62

5.126,25

4.463,40

2.949,01

III. MINING REGULATION

TAX/NON TAX OBLIGATION TARIFF
TYPE

IUP

CoW

CCoW

Landrent/Deadrent

1, 2, or 4 USD/ha based on phase

operation

2 4 USD/Ha (prevailing)

2 - 4 USD/Ha (prevailing)

Royalty

Open pit : 3,5, or 7% based on calorie

Underground :2, 4, 6% based on calorie
Metals vary from 1-4%

3- 5 % (prevailing)

13,5 % (naildown)

Corporate Tax

25%

25-45% (naildown)

25-45% (naildown)

Note :
Prevailing based on Government Regulation No. 9/2012
Naildown based on Contract
CoW : Contract of Work (KK)
CCoW : Coal Contract of Work (PKP2B)

REGULATION ON MINING
1. Ore / raw material can not be exported since 11 January 2014.
2. Metallic commodity that can be sold as concentrate (intermediate

products) are copper concentrate, iron concentrate, iron sand

concentrate/pellet, manganese concentrate, lead concentrate and
zinc concentrate.
3. Metallic mineral commodity that can only be sold in the form of

metal are such as tin, nickel, bauxite, gold, silver, and chromium.
4. After 2017, processed products can only be sold in the form of

metals, meaning neither concentrates nor ores, can be exported.

IV. INVESTMENT POLICY AND

OPPORTUNITY
IMPROVEMENT OF
INVESTMENT POLICY

1. Licensing Process
Reduce obstacles in starting a business, especially in the case of licensing
procedures.
2. Revise "Negative Investment List (DNI)"
Trying to create a more friendly investment rules for investors.
DNI with new sectors open to foreign investment.
3. Increasing tax incentives
Facility for Corporate Income Tax (PPh Badan) given by the government could
be in the form of Tax Allowance (pursuant to Government Regulation of the
Republic of Indonesia No.1/2007 jo.62/2008 jo.52/2011 )
or Tax Holiday (pursuant to Regulation of Finance Minister of the Republic of
Indonesia Number 130/PMK.011/2011)

11

INVESTMENT OPPORTUNITY PER PHASE

Metallic
Mineral and
Coal
WIUP Auction

Exploration Phase

Geology Survey
Exploration
Boreholing

Mining Operation Phase

Non Metallic
and Rock
WIUP
Applicatio
n

Mineral
Mineral Processing
and Refining
Facility (Smelter)

Expert consultation
Overburden management
Sales and rental of heavy
equipment
Management of tailings and
waste
Construction of power plant
development (to support the
smelter industry)
Transport
Underground Mining

Coal

Mining Closure
Phase

Coal gasification
Coal upgrading
Coal liquefaction
Coal Briquetting
Coal Water
Mixture

Power Plant for

Processing of
Minerals
Through Power
Purchase
Agreement

Expert
consultation
Reclamation
and Mining
Closure
Management

Trading
Special Permit
for
Transportation
and Trading

MINERAL AND COAL DOWNSTREAM ACTIVITIES

Beneficiation policy:
without more downstream activities, Indonesia will miss the opportunity to increase employment and profit
margins on the value chain because of the absence of downstream processing industries.
Copper

Concentrate

Anodes

Cathodes

Various

Coal

Nickel

Nickel matte ,
Ferronickel

Nickel ore

High grade nickel

products

Iron steel
Smelting

Iron ore

Ore dressing
Agglomeration
Iron making
Steelmaking
casting

non-existing industry

Year
2014

Upgradin
g

Conversion

Downstream
Hot
forming
Cold
forming

Finished
product

High-rank coal

Applications

Active carbon
Coking coal
Gasification
Liquefaction

Due date for adjustment to minimum

beneficiation requirement
13

INVESTMENT OPPORTUNITY IN MINERAL AND

COAL
PROCESSING OF ORE MINERALS/SMELTING
- nickel laterites into NPI, Ferronickel, Nickel matte, NiO and Ni metal and stainless steel and other associate metals
such as cobalt and vanadium
- bauxite into alumina and aluminium and its downstream derivatives
- copper ore into copper and other associate metals
- iron sands and iron ore into pig iron, sponge iron, titanium oxide and associate metals
- tin ore into tin-based industry and associate mineral processing such as REE, Zr, Titanium, Nb and Wolfram
2. COAL
-

undeground coal mining

coal processing and upgrading
coal gasification and coal liquefaction
coal slurry
coal blending
coal power plant

3. POWER PLANT FOR PROCESSING OF ORE MINERALS/SMELTING

- Electricity needed until 2025 for processing of ore minerals/smelting is about 5.000-6000 MW.
- Main sources of fuel for electricity are mainly coming from coal, others such as hydropower.
- State owned electricity company (PLN) or Independent Power Producers through Power Purchase Agreement with
smelters can supply the power to smelters (captive power).
- Smelter operators can also build power plants for their energy needs, and they may sell excess of power if any to
PLN.

14

INDONESIAN ELECTRICITY INFRASTRUCTURE

: Existing transmission line
: Planning transmission line
: Power generation

KALIMANTAN :
Generation : 1,943 MW (4%)
150 kV: 2,477 kms
70 kV: 123 kms
JTM : 25,467 kms
JTR : 25,019 kms

INSSTALLED CAPACITY: 47,868 MW

TRANSMISSION LINE (38,096 kms):
kms):
- 500 KV
: 5,052
- 275 KV
: 1,028
- 150 KV
: 27,780
- 70 KV
: 4,228
JDISTRIBUTION LINE (741,957 kms):
kms):
- JTM
: 313,050
- JTR
: 428,907

kms
kms

SULAWESI :
Generation : 2,442 MW (5%)
150 kV : 3,450 kms
70 kV : 534 kms
JTM : 27,105 kms
JTR : 31,441 kms

SUMATERA :
Generation : 7,834 MW (16%)
275 kV: 1,028 kms
150 kV: 8,753 kms
70 kV: 332 kms
JTM : 94,957 kms
JTR : 93,757 kms

JAMALI :
Generation: 34,618 MW (72%)
500 kV : 5,052 kms
150 kV : 13,100 kms
70 kV : 3,239 kms
JTM : 148,080 kms
JTR : 262,584 kms

kms
kms
kms
kms

MALUKU :
Generation: 269 MW (0,6%)
JTM : 4,852 kms
JTR : 2,780 kms
PAPUA :
generation: 237 MW (0,5%)
JTM : 3,126 kms
JTR : 3,916 kms
Nusa Tenggara:
Generation : 527 MW (1%)
JTM : 9,441 kms
JTR : 9,390 kms

Status: March 2014

Total of national power generation installed capacity until Early 2013 is about 47,868 MW, transmission
line is about 38,096 kms, and distribution line is about 741,957 kms.
The power system which has been well interconnected is in Java-Bali System and Sumatera System.

PROJECTION OF ELECTRICITY DEMAND 20132022

44
18
TWh
TWh
26
TWh

66
TWh

IT : 10,8%

Kalimantan: 10,7% Sulawesi: 10,8%

Maluku: 10,9%

Sumatera: 10,6%
Papua: 10%
188
TWh

385
TWh

2013 2022

Indonesia: 8,4%

144
TWh

275
TWh

JB : 7,6%

Nusa Tenggara: 11,1%

Average of national electricity demand growth 2013-2022 is about 8.4% annually (50
Source: RUPTL PLN 2013-2022

III.1. PENYEDIAAN
ENERGI
BAUKSIT
DISTRIBUTION
OF ENERGY
REQUIREMENT
FOR BAUXITE SMELTERS
A.1.4. Peta Sebaran Kebutuhan Energi
West Borneo
Number of
Companies
Total Ore Production
(Ton)
Energy (MW)

Riau Islands
Number of
Companies

10

Total Ore Production

(Ton)

17.978.004

Energy (MW)

406

IUP CnC (BAUXITE)

21
18.610.084
420

III.2. PENYEDIAAN
ENERGI
BESI
DISTRIBUTION
OF ENERGY
REQUIREMENT
FOR IRON SMELTERS
Aceh
Number of Companies

Total Ore Production

(Ton)

432.937

Energy (MW)

Riau

Central Kalimantan

Number of Companies

32,16

Total Ore Production

(Ton)

Number of Companies

148.127

Energy (MW)

Total Ore Production

(Ton)

2,55

6
3.307.050
Central Sulawesi

Energy (MW)

245,72

Number of
Companies
Total Ore Production
(Ton)
Energy (MW)

South Kalimantan

West Sumatera
Number of Companies
Total Ore Production
(Ton)
Energy (MW)

Number of Companies

Total Ore Production

(Ton)

97.525

West Java

Total Ore Production

(Ton)
Energy (MW)

IUP CnC (IRON)

10.028.329

Energy (MW)

1,68

Number of Companies

East Java

Central Java
5
347.652
21,13

Number of Companies
Total Ore Production
(Ton)
Energy (MW)

424,26

6
648.852
39,44

Number of Companies
Total Ore Production
(Ton)
Energy (MW)

3
164.471
2,32

2
94.286
7,94

DISTRIBUTION
OF ENERGY
REQUIREMENT
III.3. PENYEDIAAN
ENERGI
MANGAN
FOR MANGANESE SMELTERS

East Nusa Tenggara

Number of Companies
Total Ore Production (Ton)
Energy (MW)

IUP CnC (MANGANESE)

4
4.412
0,857

III.4. PENYEDIAAN
ENERGI
NIKEL
DISTRIBUTION
OF ENERGY
REQUIREMENT
FOR NICKEL SMELTERS
East Borneo

North Maluku

Number of Companies

Number of Companies

179.055

Total Ore Production

(Ton)

Total Ore Production

(Ton)

47,6

Energy (MW)

Energy (MW)

13
18.904.847
4.246,3

Central Sulawesi
Number of Companies
Total Ore Production
(Ton)
Energy (MW)

21
9.018.200
1.908,2

IUP CnC (NICKEL)

South-East Sulawesi
Number of Companies

52

Total Ore Production

(Ton)

22.412.469

Energy (MW)

4.744,2

Papua
Number of
Companies
Total Ore Production
(Ton)
Energy (MW)

1
675.137
159,58

UP DATE EVALUATION OF PROCESSING AND

REFINING FACILITY
1. There were 253 companies that have already signed the integrity pact, which is willing in
building the processing and refining facilities.
2. However, only 178 IUP of them has seriously committed to build the processing and refining
facilities, as seen below :
NO

PROCENTAG
E (%)

1.

05

Progress till Feasibility Study

91

2.

6 10

Progress till AMDAL (environt assessment)

14

3.

11 - 30

Progress till Ground Breaking and danEarly

Construction Plant

18

4.

31-50

Progress till middle of Construction

18

5.

51-80

Progress till Final Construction

6.

81-100

Progress commissioning/Production

PROGRESS ACTIVITIES

3. Total Investment of building Processing and Refining Facilities :

Commitment
: USD 17.4 billion
Realization of investment : USD 6 billion

MINING LICENCE
HOLDER

9
28

PROCESSING AND REFINERY PLAN AS PER

COMMODITY

V. CLOSING REMARKS
1.

Indonesia has important mineral and coal resources and

reserves that are prospective to be developed in future in the
upstream and downstream industry.

2.

Now is the awakening of mineral industry in Indonesia. We invite

Chinas investors to develop the potency of mineral and coal
resources to build downstream mineral industries.

3.

The Government of Indonesia will facilitate to bridge investors

and stakeholders in Indonesia to ease doing business.

www.minerba.esdm.go.id

PRODUCTION OF NICKEL ORE, BAUXITE,

IRON ORE/SAND

*) Plan

INCENTIVE
Fiscal
Incentive

Non Fiscal
Incentive

Income tax for investments in certain business areas and/or in

certain regions (PP 52/2011 and the Ministry Decree 130/2011)

Exemption of import duty for machinery, goods, and raw materials

for certain industries

Exemption of Import Duty, Value Added Tax, Income Tax, Sales Tax
on Luxury Goods and other tax levies for certain industrial activities

One stop service for Registration Invesment Permit

Determination as Industry Vital Object

Electronic system for Information Service and Licensing Investment

System

Custom Non-Fiscal Facility :

Rush Handling
Vooruitslag
Importer Priority Lane and Main Partner
Prenotification