Indonesian investments in coal mining industry to exceed US$ 3 billion in 2011

Monday, 17 Jan 2011

The Energy & Mineral Resources Ministry said that it expected investments in the mineral and coal mining sector to reach USD 3.2 billion in 2011, a slight increase from USD 3.18 billion in 2010.
Mr Bambang Setiawan, the ministry's director general for minerals and coal, said that coal mining would remain the largest draw for investors sector due to soaring coal prices. He added that "Domestic players will dominate new investments in coal mining this year. With the surging prices, they will find it easier to secure bank loans to expand production."
The ministry's mineral and coal directorate general said the coal reference price for 6,322 calorie coal in January 2011 stood at USD 112 per tonne, jumping 8.6% from USD 103.41 per tonne in December. Analysts and coal business stakeholders predict the price would stay above USD 100 per tonne in 2011.
Mr Bambang said that the mineral mining sector would not be as bullish as coal mining. He predicted that there would be no significant increase in the amount of investment entering the sector. He added that "Many are interested in investing in the mineral mining sector but almost all potential mining sites have been acquired by existing miners."
Mr Bambang said that to attract more investors to the mineral and coal mining sectors, the government needed to combat the weak coordination between the government and regional administrations.
He said most regional administrations did not report to the Energy and Mineral Resources Ministry when they issued mining business permits. To deal with the problem, the ministry requires regional administrations to register all permits issued. He added that "Currently, around 10,000 mining business permits have been issued, but only 4,000 are registered by us."
In 2010, the ministry secured USD 3.18 billion in investments in the mineral and coal mining sectors, comprising USD 1.48 billion from mining contracts, USD 764 million from coal contracts of work, USD 38 million from state owned enterprises' mining concessions and USD 904.82 million from mining service businesses.
Mr Priyo Pribadi chairman of Indonesian Mining Association said that investments might grow but at a slower pace compared to last year. He added that "We face several constraints that may hinder the flow of investments to the mineral and coal mining sector."
He called on the government to crack down on regional administrations that did not report the issuance of mining business permits as such violations rendered it difficult for the government to map available mining sites for new investments.

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