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MIND ID records debt increase in Q3 2019, but looks toward 2023 dividends of $1 billion
The Indonesian mining holding company has also invested in four projects for developing processing facilities and power plants this year.
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A technician checks an excavator at PT Freeport Indonesia’s copper and gold mine in Timika, Papua. State-owned mining holding company MIND ID recorded a debt increase in quarter three 2019, primarily as a result of the company’s US$3.85 billion acquisition of PT Freeport Indonesia in October 2018. (Courtesy of/PT Freeport Indonesia)
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tate-owned mining holding company MIND ID's debt skyrocketed 378 percent year-on-year (yoy) in the third quarter of 2019 following a multi-billion dollar acquisition and several hefty infrastructure investments.
Previously called Inalum before it rebranded in August, MIND ID recorded a debt of Rp 78.3 trillion (US$5.75 billion) in the July-Sept period last year.
The majority of the debt came from the $3.85 billion acquisition of mining operator PT Freeport Indonesia inked in October 2018, said MIND ID president director Orias Petrus Moedak. The remaining debt came from early investments in five mineral ore smelters and one coal-fired power plant.
“The acquisition is a promising investment but a long-term one. In the short term, we have to go through this period,” Orias told a House of Representatives hearing on Jan.23.
The accountant-turned-businessman explained that MIND ID's financial performance was “expected to go down over the next one, two or three years” before it earned annual dividends of around $1 billion from Freeport starting in 2023.
In addition to Freeport Indonesia, the holding company also owns majority stakes in coal miner PT Bukit Asam (PTBA), tin miner PT Timah (TINS) and nickel and gold miner PT Aneka Tambang (ANTM), as well as aluminum miner PT Indonesia Asahan Aluminium, which has retained the Inalum name.
The government has obligated local mining companies build domestic processing facilities in order to gain more economic value from the country’s mining industry. To support this policy, the government began this year to impose a ban on mineral ore exports to ensure that local smelters would have enough raw materials. Investment in domestic processing facilities require massive upfront capital, but Indonesia is placing its bet on long-term returns.
