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Jakarta Post

Mining investment to fall short by 40 percent this year: Energy ministry

  • Norman Harsono
    Norman Harsono

    The Jakarta Post

Jakarta   /   Fri, July 3, 2020   /   09:16 am
Mining investment to fall short by 40 percent this year: Energy ministry Workers supervise mining work at Tayan bauxite mine in Sanggau, West Kalimantan, operated by state-owned metal miner PT Aneka Tambang (Antam) in this undated handout photo. (Antam/Antam)

Investment in the mining industry is expected to fall short by US$4.74 billion this year, 40 percent of the initial target, as a result of delays in several smelter projects, the Energy and Mineral Resources (ESDM) Ministry has said.

Lockdowns at various levels applied in many countries around the world to contain the spread of COVID-19 have disrupted material and labor supplies for the projects, adding more issues to developers’ financial problems, said the ministry’s coal director, Sujatmiko.

“Smelter construction will only resume in July 2020,” he said during a webinar hosted by Cerah Foundation on Tuesday.

Prior to the COVID-19 pandemic, the energy ministry expected four new smelters to start operations this year.

However, only two smelters – a ferronickel smelter and lead bullion smelter – are slated for completion in 2020, energy ministry mineral director Yunus Saefulhak told The Jakarta Post on Wednesday.

The remaining two smelters – a nickel pig iron (NPI) smelter and a ferromanganese smelter – have had their expected operational dates pushed back to 2021 from 2020.

“We have to be realistic. We will help those facilities that proceed with their development,” he said, adding that his office continued to find investors and electricity suppliers, among other things, for the delayed smelter projects.

The pandemic-led investment shortfalls have added further delays to Indonesia’s ambitious smelter-development plan, which is part of a larger plan to transform the mineral-rich country from a commodity-driven economy to an industrial economy.

Among the bigger smelter projects facing delays are those being developed by state-owned mining holding company MIND ID, officially PT Indonesia Asahan Aluminium (Inalum), and its subsidiaries.

“Our partners cannot operate [normally] so that automatically means there will be delays whether we like it or not,” said MIND ID president director Orias Petrus Moerdak on Tuesday.

Some of the projects are expected to fully resume in October, added Orias, who was speaking before House of Representatives lawmakers in Jakarta. Meanwhile, the other projects resumed early work this month.

MIND ID subsidiary PT Aneka Tambang (Antam), a diversified miner, has put on hold a 98 percent complete $289 million ferronickel smelter in East Halmahera, Maluku, because of a lack of electricity.

Antam president director Dana Amin said the miner initially enlisted private consortium BGP to develop a power plant for the smelter but ended the deal because of “financial problems”.

“There was a lack of risk management,” he said.

Meanwhile, fellow subsidiary PT Timah, a tin miner, has brought in construction equipment to the site of its $80 million tin smelter in West Bangka, Bangka Belitung province.

“They are still waiting for an opportunity for the contractors to enter Bangka,” said Orias, adding that developers were focused on designing the facility in the meantime.

PT Freeport Indonesia, a gold and copper miner, has requested a one-year delay in the completion deadline of its $3 billion smelter in Gresik, East Java, to 2023.