Indonesia Investments has added the company profile of Ancora Indonesia Resources to the Indonesian Companies section. Ancora Indonesia Resources is a diversified natural resources company focused on Indonesia. The company's business activities include mining, trade, transportation and services, which are conducted through the company’s subsidiaries Multi Nitrotama Kimia and Bormindo Nusantara. Indonesia's current Trade minister Gita Wirjawan owns a large stake in the company.

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Although Indonesia continues with its plan to ban the export of raw minerals from 2014 onward as stipulated by the 2009 Mining Law, the government is studying the possibility to exempt companies temporarily from this rule if they show serious intentions to build processing factories or smelters in Indonesia in order to produce value-added products. Indonesia is still mainly a raw commodity-exporting country and thus misses out on value-added revenue while being more susceptible to volatility in commodity prices on the global market.

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That global demand for Indonesian commodities in both the mining and agriculture sectors is still far from recovered is reflected by several financial reports, covering financial results over the first half of 2013, that were published today (15/08). Three Indonesian companies engaged in Indonesia's mining and agriculture sectors posted significantly reduced net profits compared to the same period in 2012. These companies are Indo Tambangraya Megah, Salim Ivomas Pratama, and Perusahaan Perkebunan London Sumatra Indonesia.

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Freeport Indonesia, subsidiary of Freeport-McMoRan Copper & Gold Inc (one of the world's largest producers of copper and gold), will list five percent of its shares on the Indonesia Stock Exchange through an initial public offering (IPO). Freeport will also sell 10.64 percent of its shares to the Indonesian government. The news was announced by MS Hidayat, Indonesia's minister of Industry, after a meeting in Jakarta with the management of Freeport. Currently, 90.64 percent of Freeport Indonesia's shares are owned by Freeport-McMoRan.

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Indonesia's mining sector is still the biggest beneficiary of both domestic and foreign direct investments. Investments in Indonesia's mining sector rose 23.8 percent in the first six months of 2013 compared to the same period in 2012. This may be somewhat surprising as global economic turmoil in recent years has resulted in falling commodity prices and weak mining exports. Investments are the most important pillar of economic growth in Indonesia after the country's vibrant consumer industry.

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Freeport Indonesia, subsidiary of American-based Freeport McMoran Copper and Gold, is allowed to continue its open-pit mining activities. The company was forced to halt its mining activities temporarily after an underground tunnel collapsed in mid-May, resulting in the deaths of 28 people. After a thorough evaluation by an independent team of investigators, Freeport is allowed to resume operations. The permission was granted by Indonesia's Ministry of Energy and Mineral Resources.

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In a new survey, conducted by the Fraser Institute, that assesses the state of the investment climate in the mining sector in 2012-2013 in countries around the globe, Indonesia is ranked at number 96. Both tax and regulatory uncertainties in Indonesia's mining sector are cited as reasons for the low ranking of the country. As investments in the mining sector are capital intensive and long-term in nature, investors thus need a clear legal framework that is not susceptible to sudden changes due to political issues.

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Today, Statistics Indonesia released Indonesia's economic growth figure for the first quarter of 2013. Compared to Q1-2012, Indonesia's gross domestic product (GDP) grew 6.02 percent. This growth was supported by almost every sector except for Mining and Extracting, which fell 0.43 percent (YoY), indicating that natural resources are still not back on track. The largest contributor to Indonesia's Q1-2013 growth is Transportation and Communication, which grew 9.98 percent.

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In the first quarter of 2013, sales figures of trucks and heavy equipment in Indonesia still show no significant upward movement yet due to low activity in the country's mining, plantation and construction sectors. The chairman of Indonesia's Heavy Equipment Manufacturer Association (HINABI), Pratjojo Dewo, said that production numbers of heavy equipment in January and February rose slightly compared to the same months last year.

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Indonesia has been named one of the world's least attractive places regarding foreign investment in the mining sector according to a survey conducted by Canadian think-tank the Fraser Institute. Major concerns include legal uncertainty and red tape (bureacracy). Moreover, the country has been showing a worsening trend in recent years as its rank declined from 72th in 2009 to 97th in 2013.

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Sales of United Tractors, the largest distributor of heavy equipment in Indonesia and part of the Astra Group, continue to climb in 2017. In fact, the management of United Tractors now expects full-year 2017 sales to exceed their initial forecast. Sara Loebis, Corporate Secretary of United Tractors, said the company has therefore raised its forecast for full-year heavy equipment unit sales from 3,000 to 3,200 units.

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The non-performing loan (NPL) ratio in Indonesia's mining and excavation sector has risen drastically over the past year. Moreover, there seems few room for an improvement of the NPL ratio in this sector on the short term because mining and excavation companies are expected to remain amid tough conditions in the remainder of the year. The NPL ratio is a key indicator for measuring bad loans.

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Overall, low crude oil prices are problematic for stock markets as low prices indicate the world economy is not expanding on full throttle. This curbs investors' risk appetite. Particularly those companies that are active in the oil industry (or in related industries) will likely face declining share prices. However, there are also positive effects of low oil prices. For example consumers' purchasing power should improve because prices at the gas pump are lower, while some companies can curb operational costs. Hence, consumer and transportation stocks should actually benefit from low oil prices.

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Reportedly, the government of Indonesia will hand Freeport Indonesia a temporary export permit for copper concentrate shipments, hence being able to bypass (for the moment) Indonesia's controversial ban on mineral ore exports. Freeport Indonesia, the local unit of US mining giant Freeport McMoRan, has been unable to export copper concentrate for the past three months, thus missing out on about USD $1 billion in revenue. Due to the drop in exports, mining activities at the Grasberg mine in Papua fell drastically, giving rise to concern about layoffs.

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An interesting story was released on Bloomberg Markets Asia on Wednesday (29/03) about the sliding role of commodities in the Indonesian economy and the need for Southeast Asia's largest economy to find a new growth engine (or better: several new growth engines) that will take the country to economic growth levels of +7 percent year-on-year (y/y) as once pledged by Indonesian President Joko Widodo during his presidential campaign in 2014.

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The Indonesian Mining Institute (IMI) is concerned about foreign perceptions of Indonesia's mining sector. According to the Fraser Institute, a Toronto-based public policy research and educational organization, Indonesia now ranks lowest in terms of the "state of the investment climate in the mining sector across the world". A new survey, conducted by the Canadian think-tank, shows that Indonesia's recently introduced government policies (stemming from the New Mining Law) that affect the activities in the mining sector has seriously undermined foreigners' confidence in a conducive investment climate in Indonesia's mining sector.

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Uncertainty about the continuation of the company's copper concentrate exports could imply that Freeport Indonesia needs to terminate operations at the Grasberg mine in Papua. Currently, shipments of copper concentrate from the mine to the smelter in Gresik (East Java) have ceased, while the company's storage facilities are full to the brim. Part of workers at the Grasberg mine have been sent home as the processing plant has not been producing any concentrate since Friday (10/02).

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State-controlled, yet listed on the Indonesia Stock Exchange, tin producer and exporter Timah is expected to experience improving corporate earnings in 2017 supported by recovering production volumes and the rising trend of global commodity prices. Danareksa Sekuritas expects the price of refined tin to rise 12.4 percent to USD $20,000 per ton this year, followed by a further rise to USD $21,000 per ton in 2018. Meanwhile, Danareksa Sekuritas also expects Timah's production volume to rise around 25 percent (y/y) to 28,000 tons this year (slightly below the company's target of 30,000 tons).

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On Thursday (12/01) the government of Indonesia said it eased regulations concerning the controversial ban on exports of metal ore and concentrates of other minerals. Based on the New Mining Law that was revealed in 2009, Indonesian shipments of mineral ore would be banned starting from January 2014. This policy was designed in order to boost the development of domestic processing facilities (smelters) and become an exporter of value-added mining products (hence becoming less vulnerable to volatile prices of raw materials).

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Chances are big that Freeport Indonesia will conduct an initial public offering (IPO) on the Indonesia Stock Exchange to comply with the divestment requirement. Freeport Indonesia, the local unit of US-based Freeport-McMoRan Copper & Gold, operates the vast Grasberg mine in Papua. This mine is the world's largest gold mine and third-largest copper mine. The Indonesian government's divestment requirement is one the demands for starting contract extension negotiations in 2019.

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