President & CEO, PT Vale Indonesia
Mining is a long-term investment; therefore, we need consistency of the government and policy. The recent changes create some concern for us, especially in the nickel segment. The government introduced the law and is generalizing minerals into one item. It is facing issues of exporting concentrate and the copper concentrate. Not all minerals are all equal. For nickel, Indonesia accounted for 30% of the global market share in 2011. Indonesia will always be an important nickel producer in the world, which is why nickel policy will have an impact on the global market. Our quality and grade is high compared to other countries in Asia. The policy of banning the export in 2014 revealed the trends. We are seeing the growth of value added—already USD6 billion in investment—and the process of value addition is happening. When the government imposed that law, development started to happen.
CFO, Delta Dunia Makmur
Infrastructure is important and will result in higher productivity and potentially lower energy and logistic costs, eventually translating into lower inflation as well. However, infrastructure is a long-term investment. PPPs are a great idea, but making them a reality is a long-term process. The investment climate has to be conducive, the policy has to be stable and supportive, and in some cases there has to be some central reform that needs to be done before a project can be viable. For the private sector, there must be an economic angle before this can work. China has also committed to balancing the price of coal. If the price of coal is too low, the industry will suffer. Around 85% of its coal comes from underground operations and, therefore the costs of operation are higher. Whereas in Indonesia, coal mining is mostly open pits and, therefore, cheaper. The industry seems to hope for it to remain at USD65-75 per ton. We are satisfied with that and believe in 2018 that the coal price will still be above USD75.
President Director, Harjanto Widjaja
Our products are mostly exported to China. We initially exported all the ore to China; however, the government later introduced a new law that stated we could not export raw materials. Consequently, we built a flotation plant to extract the higher quality of leads and zinc, or the concentrates. We now sell a more premium and value-added product than we did when selling just ores. We also save a great deal of the cost. Before, we had to transport 200,000 tons of ore a month from mines to ports, and it would cost a lot. Now we just transport 2,000-3,000 tons of concentrate, which costs less and requires fewer trips. When the government enacted the mineral export legislation, we started building a smelter as well, and we are looking at other markets besides China. We are doing a great deal of testing now to determine if we can produce bullion from the concentrate with a higher grade. If all goes well in the coming two months, we will consider starting in 2018.
INDONESIA - Health & Education
President Director, Prodia Group
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