Wednesday, 27 Jul 2011
Nearly two decades ago Ms Sunarti Abror, the daughter of a vegetable seller in Indonesia, invested the family savings in three excavators, which she leased to coal miners who used only hand tools. Today, Ms Abror has three coal mines of her own, which produce about USD 100 million of coal a year. She also has a water bottling factory, palm oil and rubber plantations, and a shipping business, all of which have made her a dollar multi millionaire.
She said that "Our business is growing rapidly, enabling us to expand into other areas. I want to hire as many people as possible and have the business flow like a river."
On a recent visit to her open pit mine, a vast clearing in the jungles of Borneo, Ms Abror was met by a fleet of security jeeps, which escorted her down the USD 4.5 million private road she had built to serve her own private coal port.
Indonesia's huge reserves of thermal coal, used for power plants, are being aggressively targeted by energy hungry China and India. The demand, combined with high commodities prices, is driving a resources boom in remote Indonesian provinces, and creating billions of dollars in personal wealth.
According to Mr Rudi Vann, a coal analyst at WoodMackenzie, Indonesia in 2005 overtook Australia as the largest thermal coal exporter. By 2015, 40% of global thermal coal shipments will come from the archipelago of 17,000 islands, cementing Indonesia's status as the king of black gold. And two of the top three global suppliers of thermal coal will be Indonesian, Bumi Resources and Adaro, which already dominate domestic production.
Indonesia has a key advantage over Australia geographically. It is half the distance from the largest coal importers China, India, South Korea, Japan and Taiwan. Its producers have also added basic infrastructure, such as conveyor belts, railways and ports more easily due to less stringent regulation.
Mr Peter Lynch executive chairman of CoKal, an Australian miner in Kalimantan, the Indonesian part of the island of Borneo said that "Indonesia is laughing. Everywhere you look there is a new barge facility or crane. Growth seems to be unrelenting."
The growth in the sector is creating visible social change. Despite its relatively poor population of 240 million, Indonesia has nearly 50,000 millionaires. The number of billionaires doubled last year to more than 20, almost all of them commodities tycoons.
Extractive industries, mainly coal, oil and gas, create considerable employment and make up about a third of Indonesia's economy, while tax income from coal mining alone will reach USD 7 billion this year.
Ms Abror does her banking in Banjarmasin, an industrial town of 600,000 people where she has a USD 10 million line of credit with Mandiri Bank, Indonesia’s largest bank by assets. Over the past five years, Ms Mandiri said its loan book soared 188% to USD 1.6 billion in Kalimantan.
Ms Abror found her most profitable mine, in the Pintap district of South Kalimantan, while accompanying her husband on a business trip in 1993. He was then a civil servant under the authoritarian regime of late President Suharto, supplying coal to a state owned cement company. It uses the fuel to fire its kilns and is one of Mrs Arbor’s most loyal customers.
Under the authoritarian regime of late President Mr Suharto, who was toppled in 1998, the most lucrative resource deals were awarded in Jakarta to his cronies and family.
Ms Abror's rise is an example of how, even after 13 years of democracy, success still hinges on having strong connections with government officials who award coveted land titles and operating permits.
Ms Abror grew up on the island of Java three doors down from Indonesian President Susilo Bambang Yudhoyono, but played down the importance of the relationship.
(sourced from CNBC)
Nearly two decades ago Ms Sunarti Abror, the daughter of a vegetable seller in Indonesia, invested the family savings in three excavators, which she leased to coal miners who used only hand tools. Today, Ms Abror has three coal mines of her own, which produce about USD 100 million of coal a year. She also has a water bottling factory, palm oil and rubber plantations, and a shipping business, all of which have made her a dollar multi millionaire.
She said that "Our business is growing rapidly, enabling us to expand into other areas. I want to hire as many people as possible and have the business flow like a river."
On a recent visit to her open pit mine, a vast clearing in the jungles of Borneo, Ms Abror was met by a fleet of security jeeps, which escorted her down the USD 4.5 million private road she had built to serve her own private coal port.
Indonesia's huge reserves of thermal coal, used for power plants, are being aggressively targeted by energy hungry China and India. The demand, combined with high commodities prices, is driving a resources boom in remote Indonesian provinces, and creating billions of dollars in personal wealth.
According to Mr Rudi Vann, a coal analyst at WoodMackenzie, Indonesia in 2005 overtook Australia as the largest thermal coal exporter. By 2015, 40% of global thermal coal shipments will come from the archipelago of 17,000 islands, cementing Indonesia's status as the king of black gold. And two of the top three global suppliers of thermal coal will be Indonesian, Bumi Resources and Adaro, which already dominate domestic production.
Indonesia has a key advantage over Australia geographically. It is half the distance from the largest coal importers China, India, South Korea, Japan and Taiwan. Its producers have also added basic infrastructure, such as conveyor belts, railways and ports more easily due to less stringent regulation.
Mr Peter Lynch executive chairman of CoKal, an Australian miner in Kalimantan, the Indonesian part of the island of Borneo said that "Indonesia is laughing. Everywhere you look there is a new barge facility or crane. Growth seems to be unrelenting."
The growth in the sector is creating visible social change. Despite its relatively poor population of 240 million, Indonesia has nearly 50,000 millionaires. The number of billionaires doubled last year to more than 20, almost all of them commodities tycoons.
Extractive industries, mainly coal, oil and gas, create considerable employment and make up about a third of Indonesia's economy, while tax income from coal mining alone will reach USD 7 billion this year.
Ms Abror does her banking in Banjarmasin, an industrial town of 600,000 people where she has a USD 10 million line of credit with Mandiri Bank, Indonesia’s largest bank by assets. Over the past five years, Ms Mandiri said its loan book soared 188% to USD 1.6 billion in Kalimantan.
Ms Abror found her most profitable mine, in the Pintap district of South Kalimantan, while accompanying her husband on a business trip in 1993. He was then a civil servant under the authoritarian regime of late President Suharto, supplying coal to a state owned cement company. It uses the fuel to fire its kilns and is one of Mrs Arbor’s most loyal customers.
Under the authoritarian regime of late President Mr Suharto, who was toppled in 1998, the most lucrative resource deals were awarded in Jakarta to his cronies and family.
Ms Abror's rise is an example of how, even after 13 years of democracy, success still hinges on having strong connections with government officials who award coveted land titles and operating permits.
Ms Abror grew up on the island of Java three doors down from Indonesian President Susilo Bambang Yudhoyono, but played down the importance of the relationship.
(sourced from CNBC)
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