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Mining sector regains banks’ trust
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A vehicle drives through a mining site of gold and copper miner PT Freeport Indonesia in Grasberg, Mimika, Papua. (JP/Nethy Dharma Somba)
I
ndonesian banks have planned to channel 9 percent of their total loans to the mining sector throughout 2017—an increase of more than 6 percent compared to last year—amid an upward trend in the prices of global commodities.
The gross non-performing loan (NPL) ratio, or the indicator of bad loans, in the mining sector skyrocketed to its highest point, 7.4 percent in November last year, before stabilizing to 7.05 percent in March, according to data from the Financial Services Authority (OJK).
This contrasts with the situation during the mining sector's heyday in the 2012-2013 period, when the NPL level could reach 0.67 percent. Financial regulators set a healthy NPL level at 5 percent.
(Read also: Indonesia to speed up negotiation with Freeport)
“The figure was still high in March, but it is getting better,” OJK deputy commissioner Santoso Wibowo said recently in Jakarta.
“Throughout this year, we hope that the NPL level will still recover in line with the business plan of banks, which expect the mining sector to absorb 9 percent of their total loans."
If this happens, contributions from the mining sector will jump significantly compared to 2.86 percent throughout last year.
Global oil prices reached its lowest point of around US$40 a barrel in November last year before strengthening to around $50 a barrel today.
Meanwhile, the price of Australian thermal coal stood at an average of $87.41 per ton in the first quarter of 2017 after recording an average of $65.9 per ton throughout last year. (bbn)
