IEDC Conference 2022; – Outlook of Explorers and Investors. Vol 140

The Indonesian Exploration–Developer Collegium [IEDC] was held over the 11th and 12th of August 2022 in a virtual format. The concept of this MGEI event is to generate a mixing environment for investors and project owners. The event was held in English, wherein the zoom format was attended by 100- 150 viewers, and the event included virtual booths. There were may speakers covering a variety of topics. Although there were a number of interesting presentations on downstream, regulatory, policy, ESG and other topics, these notes will focus on the explorers and their related investors. I apologize for any errors or omissions related to this article.


Richard Schodde adjunct professor, Centre for Exploration Targeting UWA, provided an overview of how Indonesia compares with the rest of the world for expenditure, discoveries and value proposition for exploration (greenfield & brownfield). Between 2002 and 2017 there was a global peak in exploration expenditures of up to USD 40 billion/ year. The 2020 global expenditure was around US$ 16 billion/ year. The Pacific / SE Asia region (including Indonesia) contributes about 2% to global exploration expenditure, though Indonesia is the largest contributor to this region’s exploration. Most exploration is seeking gold, copper, nickel and coal. The number of discoveries in Indonesia were only a only a few prior to 1969, then between 1970 to 2009 the discoveries rose to around 30 per year, and declined in the 2010 to 2020 period to around 15. This decline is partly attributed to the regulatory changes and the moratorium starting in 2009.  Of 241 recorded discoveries in Indonesia, some 35 are considered giant deposits. Since 2011 there have been 15 recognized new discoveries (7 Au, 2 Cu, 1 Ni, 2 coal & 3 other), of which 1 is considered a tier 1 deposit (Hu’u Cu-Ag in 2015), 1 is a tier 2 discovery, 5 are tier 3 and 8 are unclassified deposits. Some 82% of the value comes from tier 1 & 2 discoveries made between 1975 and 2020. 

Indonesia’s overall ratio of exploration expenditure to value of discovery is at a global high with a “bang for buck” ratio of 1.3, with Australia second at 1.19 and double that of Canada at 0.70. Indonesia’s high performance is largely due to the single Hu’u discovery. Exploration success has created significant value for Indonesia.

Discussion emphasized the need for patience and persistence, and that small projects can grow into larger mines. Exploration could be enhanced through attracting back the major global miners with their deep pockets and global leading professionals. The majors concerns include reducing regulatory risk and allowing time for such companies to firmly establish themselves in Indonesia.

Bank Investors Outlook;

M. Zulkifli Salim from the OJK outlined that the Indonesian mining sector contributes about 10% of GDP, and is importance for the national banking sector. The mining sector has relatively high NPL at 6.4% that is partly related to delayed impacts of Covid, but loan growth is very high at about 53% reflecting strong profits on the back of high commodity prices. A BNI presentation emphasized the banking industries Loan Production Performance assessment links finance with ESG, nett zero and such social factors. BNI, as a national bank, is open to business with the mining sector, particularly for expanding projects, and recognized low risk clients. BNI is keen to invest in the downstream side of mining, but are concerned over security of mineral supply over the 10–20-year financing period. Arif Siregar expanded upon this BNI concern for a long-term stable business climate, in noting that the larger international mining houses are concerned about consistency of the mining regulations, and the high barriers to enter the greenfield mining business. Arif remined us that investment in greenfield has nearly stopped. Mining projects may look to local banks for additional finance, provided they meet the banks requirements. Banks recognize the need for mining to support society.

Discussion emphasized that mining is first a business that looks for a high IRR, with payback typically over a very long term (particularly if smelters are to be built). To sustain the mining industry, the exploration industry needs to attract more investor. This may be though; 1) reducing regulatory risk with long term (20 – 30year) stability of regulations, and; 2) improving the business case, such as adjusting divestment to consider suitable pay back period.

Miners & Explorers;

PT. ANTAM Tbk provided a summary of their nickel projects in, South Sulawesi (Kolaka) as the Pomala Prospect, and at North Maluku with the Sangaji, Moronopo, Tanjung Buli and Pakal projects. Many of these projects are in the planning stage, with ongoing negations for partners and investors. Some projects are continuing to complete full documentation (AMDAL etc), and negations are made difficult with the rapidly changing regulations.  Antam must also consider Indonesia’s national policies when negotiating to secure funding for exploration and downstream (battery development) projects. Ongoing issues include determining a price for ore to smelter, resolving waste tailings, sale of recycled batteries etc. Discussion included the balancing imports of battery elemt components (graphite, Lithium etc) with stimulating exploration to develop a domestic source of such elements. It is hoped that once new IUP’s are to be issues, that exploration for graphite and other elements will be stimulated.

Inalum outlined the projected growth of the aluminium industry. Inalum needs further government support to get a competitive energy price, licenses and other relevant supporting activities. At present energy from coal mines is more reliable, though looking at alternate energy sources.

PT. ABN Investama Tbk have 3 IUP’s in 2 provinces, along with contract mining and service operations in 82 sites employing 8,377 people and earned a revenue of US$ 1.02 billion with an operating profit of US$ 303.5 million in 2021. ABN are an example of a cashed-up potential investing company, with a strong understanding of the mining industry

Bumi Resources Minerals [BMR] explores and mines gold, silver, copper, zinc and lead. PT. Citra Palu Minerals Poboya prospect is a complex low sulphidation epithermal deposit, with plans to complete its expansion in Q3- 2022 to reach 4,500tpd of gold and silver ore into its CIL plants. PT. Gorontalo Minerals Sungai Mak project is a porphyry copper (Cu & Au), while the Motomboto North prospect is a high sulphidation epithermal Au, Ag project. Construction permits was issued in 2019, with present activity of developing an access road, camp etc. PT. Dairi Prima Mineral’s Anging Hitam project is a SEDEX (Exhalative Sediment) deposit of Zn, Pb, Ag. The Dairi project is waiting for a permit to extend its underground access. PT. Linge Mineral Resources Abong Complex contains six prospect areas of Bulan, Bintang,1, Bintang 2, East Bulan, North Bulan and Lumut, that are typically low sulphidation sediment hosted replacement gold style epithermal systems.

Ari Sulistio of PT. Bhakti Alam Indonesia Timur presentation emphasized the Indonesian manganese potential in eastern Indonesia. Most of Indonesia’s manganese deposits are too small to sustain their own smelter for manganese metal, but some consideration to produce Mn Oxide may have potential. An East Nusa Tenggara manganese deposit has halted production (2021) to comply with BKPM requirements and is expected to recommence production. Ari refers to an “infinity war” between the reality of production and the expectations of government and community. For example; – Despite having good international consultants, there are no CPI for manganese in Indonesia to submit compliant reports. The project needs a suitable partner, and finance, particularly if an expensive refinery is required.

FH. Kristion of PT. Medco Energi Mining Internasional outlined research work done on Underground Coal Gasification [UCG]. Government initiated research into this field has been sporadic and limited. Private initiatives for UCG can not start until the government issues regulations on good mining practice, and there is no KCMI standardization for this industry. The present drilling and exploration activities are following the oil & gas Standard Operating Procedures that have an inappropriate cost basis.

Andrew Waltho of Andrew Waltho Consulting PL, Brisbane provided insights to the kaolin industry. Some 46.4 million ton of kaolin is produced annually, of which Indonesia is the 10 largest producer at 1.4 million tpa. Global markets are dominated by 3 major players. Kaolin is used in the paper industry, porcelain and many other uses. The price of kaolin is increasing, with US kaolin price of $160/ton in 2021. Future applications for kaolin look promising for continued demand, particularly for very high quality kaolin.

Oepoyo Prakoso of PT. Solusi Bangun Indonesia [SIG] introduced their cement and aggregate industry, with production of cement at 14.8 million tpa. The presentation centred on their good mining practice and social programs.


Dr. Eko Budi Lelono, head of the Geological Agency ESDM outlined their agencies review of “green metals”, including Si, REE, U for energy generation, and Cu, Al for energy transmission. The agency has data related to the resources and reserves of Fe, Mn, Cu, Al, Ni, co, Cr, Zn, REE, and Li, along with studies on the geological settings for such elements. This data has been collated from company exploration reports, plus the agency’s own exploration and research activities. Research indicates there are 24 exploration locations in Sumatra and 40 exploration locations in Kalimantan.

Prof Evvy Kartini of the National Battery Research Institute [NBRI] encourages the exploration and development of battery elements in Indonesia, including graphite, lithium and manganese. Discussion suggested there is a need for supportive regulations, research and investors, particularly as some of these commodities may not have the business benefits of economies of scale.  Indonesia is suggested to consider exporting small quantities of raw / partly processed critical minerals, with linkages to imports of element feed for battery plants etc. More synergy and co-operating between many different departments needs to be supported, and the minister is encouraged to promote longer and more continuous research projects. Discussion urged the government research agencies and their associates to release research papers on certain minerals in order to stimulate further research and investment.

Anita Parbhakar-Fox associate professor with the University of Queensland outlined various project to research old mine waste for further mineral extraction. Opportunities for Indonesia include recovery of fine tin and monazite etc from Banka.

Personal Conclusions;

There are numerous banking and project owners progressing slowly towards finding agreement to explore and develop various mineral deposits in Indonesia. A common cause of concern is the regulatory risk. The recent Jakarta Post newspaper article (18 Aug 2022) has broadened this regulatory risk to include procedural risk, as implied in the Energy and Resource ministry comment on DMO coal to PLN as per “If they do not comply with the assignment, this ministry threatens to disable the companies export feature on the Minerba Online Monitoring System (MOMS) application”. There are also common calls for the need for greater coordination between government agencies, sustained research, improved commercial terms for miners etc. 

It would appear the government and industry are basking in the sunlight of the successful Ni industry, and perhaps over emphasizing the future of a battery industry. In reality the battery industry, and many other mining projects, are taking a long time to get such projects off-the-ground. We saw the compulsory government acquisition of Freeport shares took forever, and learnt that in any deal, the two parties need time and commitment to sort out the fine detail before implementing a workable agreement.

It is hoped that all this time and effort for mega projects is not detracting from the Government’s efforts to stimulate the smaller exploration and mining projects in Indonesia. From small seeds can grow great trees.