Mining industry in Indonesia is still attractive and Indonesia should lead the mining industry in Southeast Asia

Ido Hutabarat, Chairman of Indonesian Mining Association, thinks mining in Indonesia is still attractive.

What are the upgrades that need to be done?

In the mining industry, because Indonesia is an archipelago, the coal and mineral industry is not like in East Kalimantan or in south Kalimantan. It is easier for the coal mining or mineral industry to bring the coal or the mineral to the port. We can build a port and then we can build a jetty, or we can build a big port. If the traffic is not enough, we can build only the jetty and then bring it by a truck shipment. Only in an area like central Kalimantan or in Sumatra, which is the infrastructure is not very good, it is difficult for us, especially for mining company, to bring out the product to the vessel. We need infrastructure in the Sumatra area, and also in the central Kalimantan. In Sulawesi, in Java, I do not think it is a problem, because the mining is not too far from the river or from the sea. But in Sumatra, we need the government involvement to build the road.  In Sumatra, it is a very high cost to bring the product to the vessel. It takes say 100 to 200 kilometres, whereas in Kalimantan, it is only 30 kilometres.

What is the strategy for the infrastructure?

Currently, we have not talked much about this infrastructure. A private company has already started building the route that in Sumatra. Unfortunately, they built it when the price was going up. Now when the price is going down, the small mining stops. This infrastructure does not work, because when they calculate, they need a certain volume. The government needs to invest and make the route so the smaller mining companies in the area can bring the coal or the product to the vessel. Conversely, they can attract foreign investors to invest in building the route so the small mining company can bring the product to the vessel. If the coal mining company themselves to build this infrastructure, it would be very costly for them.

What are your expectations?

For me, mining is still attractive. The price will not always be low. Because commodity is cost-driven, when the price is already below the cost of production, there will be less production. Pricing will also go up and down. It depends on how you manage your company. In mining, you have to keep going on, keep producing, even though the price is going down, because it is better for you. It is cheaper to you to continue only running at viable costs. I believe that mining industry is still attractive in the next coming months and years.

Do you think that decision in Indonesia has an important role to play?

Yes, I think Indonesia should lead the mining industry in southeast Asia. There is no other country in southeast Asia who has a mining industry as big as Indonesia. If you go to Vietnam or the Philippines, the coal or mineral production is not too much. In northern Thailand, most of the coal consumption is by the Mae Moh power plant, and there not much mineral industry. Malaysia used to be the number one in tin industry, but no more. Indonesia should be the lead. Right now, there is no Indonesian company investing in other country, because Indonesia coal mining is still very attractive to invest. However, some of the companies have already started doing a trial in Vietnam.