Shares of Indonesian mining company Merdeka Copper Gold rose about 15 percent on its trading debut on Friday (19/06). The company, a subsidiary of Saratoga Capital, was the sixth company to conduct an initial public offering (IPO) on the Indonesia Stock Exchange (IDX) in 2015. Head of Finance and Corporate Secretary Ellie Turjandi said that Merdeka’s shares had been oversubscribed nearly 40 times during the public offering (11-15 June 2015), reflecting investors’ confidence even though the company has not yet begun production.

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Indonesian miners may be allowed to resume bauxite exports after a government official signalled that the Indonesian government is looking at relaxing its (raw) mineral export ban. This ban, implemented in January 2014, was introduced in an effort to boost domestic processing capacity, generate more revenue (by adding value to its mineral products) and enhance employment opportunities in Southeast Asia’s largest economy. However, amid the lack of domestic smelting capacity, the export ban has led to a plunge of exports.

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Ada berita buruk bagi perusahaan-perusahaan pertambangan batu bara di Indonesia. Pemerintah Indonesia berencana untuk menaikkan royalti batubara pada Maret 2015 dalam upaya untuk meningkatkan pendapatan dari sektor sumberdaya alam. Selain menaikkan royalti, Pemerintah juga akan melaksanakan sejumlah tindakan untuk meningkatkan pengawasan di sektor pertambangan batu bara (karena pengapalan batubara secara ilegal dan penghindaran pajak telah menjadi masalah besar). Rencana untuk meningkatkan hampir 100% royalti batubara diduga akan memberikan dampak sangat negatif bagi para penambang kecil dan perusahaan-perusahaan baru yang berfokus memproduksi batubara kalori rendah.

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The Indonesian Ministry of Energy and Mineral Resources signaled that the government may (again) decide to postpone full implementation of its ban on exports of raw mineral ores and concentrates as the country still lacks sufficient smelting capacity to produce value-added mining products. Through this export ban, stipulated by the 2009 Mining Law, the Indonesian government aims to enhance revenue generation in the country’s natural resources sector by forcing miners to produce and export value-added products instead of raw materials.

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Indonesia’s Ministry of Energy and Mineral Resources may revoke the Mining Business Permit (Izin Usaha Pertambangan, or IUP) of 4,643 local mining companies at the end of January 2015 as these companies still lack the clean and clear certificate (CnC) from regional authorities. This CnC certificate indicates that the mining company has no outstanding royalty and other tax debts, fulfilled its exploration and environmental commitments, has no property delineation issues and obtained the necessary forestry permits.

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On 14 December 2014, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website in the last seven days. Most of the topics involve economic matters such as the central bank’s interest rate policy, an update on palm oil, the middle income trap, November car sales, the performance of the rupiah exchange rate, legal matters regarding mining, and more.

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Due to a strike at Freeport Indonesia’s Grasberg mine in Papua, the company’s copper production has fallen by about a third thus leading to speculation that global copper prices may increase after having fallen almost ten percent in 2014. About one thousand workers of Freeport Indonesia have been on strike since the second week of October after a fatal accident at the end of last month. The workers request the sacking of around 50 managers at the subsidiary of US-based Freeport-McMoRan Copper & Gold.

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Coal exports from Indonesia are expected to decline in the remainder of 2014 as the Indonesian government implemented a new licensing system for domestic coal miners - the ‘Listed Exporter’ status (Indonesian: Eksportir Terdaftar, ET) - per 1 October 2014 in an effort to optimize monitoring of the coal mining industry (illegal coal shipments from Indonesia form a structural problem). This new legal framework has led to confusion among miners causing that not all miners have been able to obtain the necessary status to resume coal shipments.

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R. Sukhyar, Director General for Coal and Mineral Resources at the Indonesian Ministry of Energy and Mineral Resources, stated that the country is plagued by structural illegal coal shipments from coal-rich regions in Kalimantan and Sumatra. Sukhyar estimates that each year between 30 and 40 million tons of coal is exported illegally from Indonesia, Southeast Asia’s largest economy. Based on current coal prices, this would imply that USD $1.2 billion worth of coal is shipped illegally per year causing the government to miss out on royalties.

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Indonesia’s House of Representatives (DPR) has passed a new plantations bill that aims to maximize land usage and opens up Indonesia’s plantation sector to smallholders. However, the retroactive clause that would limit foreign ownership to a maximum of 30 percent (from 95 percent currently) was dropped from the final version. This clause was highly controversial and would have been a major obstacle for foreign companies engaged in Indonesia’s plantation sector (such as Golden Agri-Resources and Wilmar International).

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Whether Newmont Nusa Tenggara (NNT) will file for international arbitration over a six-month old export dispute with the Indonesian government remains unclear. Although many analysts would like to see international arbitration over this case, such a step would imply several risks for the copper miner (which is for 56 percent owned by US-based Newmont Mining Corporation and Japan’s Nusa Tenggara Mining Corporation). The source of the dispute is Indonesia’s recently-introduced ban on exports of ore concentrates.

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In the last 12 months, the international copper price showed a neutral movement (moving more or less sideways). This is particularly due to a number of issues in China, the world’s second largest economy, which impact negatively on the copper price movement. China has become such an important market for a variety of commodities, including copper (used in construction and electronics), that other countries can be considered almost irrelevant. Why do analysts have low expectations of the copper market for the remainder of 2014?

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Indonesian Minister of Energy and Mineral Resources Jero Wacik regrets to see Newmont Nusa Tenggara, one of Indonesia largest copper miners, file for international arbitration due to Indonesia’s export ban stipulated by Law 4/2009 on Mineral and Coal Mining (Minerba). This new law includes the ban on exports of ore concentrates from Southeast Asia’s largest economy. Instead, Indonesian miners are required to process the minerals domestically first. The ban was implemented on 12 January 2014.

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Newmont Nusa Tenggara (NNT), one of Indonesia’s largest copper miners, said on Thursday (05/06) that it sees no other option than to declare a force majeure at its Batu Hijau copper mine in Sumbawa (West Nusa Tenggara) due to the export tax dispute with the Indonesian government. President Director of NNT Martiono Hadianto also informed the Indonesian Ministry of Energy and Mineral Resources that 80 percent of the company’s workers will be put on leave with reduced salaries.

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On the last trading day of the week, the benchmark stock index of Indonesia (known as the Jakarta Composite Index of IHSG) rose 0.06 percent to the level of 4,973.06 points. Trading volume was low as investors are still carefully monitoring political and economic developments in Indonesia. Earlier in the week, political uncertainty increased when the country's second-largest political party (Golkar) decided to join the coalition that supports the Prabowo Subianto and Hatta Rajasa pair in the July presidential election.

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Investors' appetite for mining and plantation stocks managed to support the benchmark stock index of Indonesia (known as the Jakarta Composite Index or IHSG) on Thursday's trading day (22/05). After the recent decline of the IHSG, market participants continued to accumulate stocks that are considered cheap. Furthermore, indices on Wall Street on Wednesday were up and impacted positively on Asian indices on Thursday, thereby providing positive market sentiments for the IHSG.

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The benchmark stock index of Indonesia - known as the Jakarta Composite Index or IHSG - rose 0.17 percent to 4,921.39 points on Tuesday (13/05), impacted by investors' reaction to positive earnings reports of Indonesian coal miners in the first quarter of 2014. Today, foreign investors recorded net buying of IDR 64 billion (USD $5.6 million) and accounted for 31 percent of trading activity. However, investors remain cautious ahead of the presidential election that is scheduled for 9 July 2014 and wait for more clarity about the (vice) presidential candidates that will compete.

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Indonesia Investments presents a selection of corporate earnings reports (covering the first quarter of 2014) of Indonesian companies that are listed on the Indonesia Stock Exchange (IDX), categorized by sector: (1) agriculture and mining, (2) basic industry and chemicals, (3) miscellaneous industry, (4) consumer goods, (5) property and real estate, (6) infrastructure, utilities and transportation, (7) finance, and (8) trade, services and investment. The tables display both net profit (loss) and revenues, together with year-on-year (yoy) growth.

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Indonesia Investments presents a selection of corporate earnings reports (covering full-year 2013) of Indonesian companies that are listed on the Indonesia Stock Exchange, categorized by sector: (1) agriculture & mining, (2) basic industry & chemicals, (3) miscellaneous industry, (4) consumer goods, (5) property and real estate, (6) infrastructure, utilities and transportation, (7) finance, and (8) trade, services and investment. The tables display both net profit (loss) and revenues, together with year-on-year (yoy) growth.

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Freeport Indonesia stated that the company's production of copper concentrate plunged since the Indonesian government implemented the ban on exports of unprocessed minerals on 12 January 2014. Currently, Freeport only produces to supply Smelting Gresik, Indonesia's first copper smelter and refinery. As such, Freeport only operates at 45 percent of production capacity regarding copper concentrate. According to Freeport Indonesia's spokeswoman Daisy Primayanti, production of copper concentrate fell to 3,150 tons per day.

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