Webinars point to the future of Indonesian Mining. Vol 125

The webinar has taken off as the principal way to communicate some new government policy, new mining methods, a geological theory, a new product, along with education components in many geoscience fields.  Webinars are conducted by Indonesian mining professional association [PERHAPI], geological association [ IAGI, MGEI, FOSI etc] along with various industry associations (coal, nickel etc) and industry media [Petromindo.com / Coal Asia Magazine, Tambang Magazine] along with universities, government departments, a range of service industries [HIS Markit] and even with foreign trade missions. Indonesians are treated to several webinars a week, with some even being held in the evening or on weekends. The depth of speakers is amazing, drawing upon experienced professionals, Indonesian and international professors.

The convenience of working from home, plus the ease and low cost to hold a webinar will likely see webinars continue as a strong form of media, even after the passing of the restrictions surrounding the corona19 pandemic. Webinars are a great unifier; wherein large numbers of people can tune in or participate from the comfort of their home or office from anywhere in Indonesia. Most webinars are free, wherein sponsors and limited advertisements allow the promoter to cover costs or make a profit.

This article looks at a number of mining industry webinar topics that may provide further stimulus for discussion on the ongoing developments of the mining industry.

The future of new technology in mining.

An earlier PERHAPI conference opened our eyes into the development of electric underground heavy mobile mining equipment. This 2021 PERHAPI conference was a great platform for seeing the advances in this, and other new technologies that are clearly defining the future of mining. There are many advances in all sorts of technology for open pit and underground mining that are being developed around the globe by many creative players. Indonesia miners are keen to take up these technologies to stay in the competitive front of the global mining industry.

An interesting discussion topic may be: How can the Mines Department, and other government agencies, keep up with the introduction of new technologies, and so ensure the safe and registered application of these new technologies?

The future direction of coal.

The government policy to find ways to add value to the coal industry [hilirisasi] has been directed at coal gasification (underground or in surface factories), along with various schemes to process coal into other products. The various forms of technology are well known, and numerous technical and feasibility studies have been carried out, along with attempts to find serious investors. Several recent webinar presentations by Mines Department officials on hilirisasi were preceded by a statement acknowledging this hilirisasi program is championed by the President. This might be interpreted as the Mines Department starting to distance itself from this policy. Several show-case projects around Indonesia appear show little progress, and there seems to be no broad uptake of the programs across the industry. The long-term predictions of low coal and oil prices, limited supportive infrastructure, regulatory uncertainty, concern over future environmental, social and governance trends, and difficulties around financial viability are a number of limiting factors impacting on these hilirisasi programs. There is a growing realization by industry and the Mines Department that the momentum towards these goals is stalling.

There are signs from industry that the hilirisasi program for coal and minerals does not work for “one size fits all”, and that the goal posts are moving.

The concept of hilirisasi of coal was seen as a policy linked to conserving Indonesian coal resources for the long-term national development, and to offset shrinking domestic oil & gas production. Indonesia signed the Paris climate action plan, and has been under international pressure to effectively shrink, or terminate, its coal industry. Indonesia’s stated long term formal strategy is to continue to limit coal production, but changes in Indonesia’s economic situation, along with the verification of abundant coal supplies, now changes Indonesian practice to expand coal exports to support the broader economy. It is understood that President Jokowi recently made a significant international announcement on enacting climate change initiatives, effectively; “Indonesia will do it in its own way, and in its own time frame”. This is widely reflected in the webinar discussions wherein the long-term use of coal shall continue. For example, some state power industry executives have mentioned in webinars that coal represents the cheapest reliable source for large power plants, and that alternative energy sources should compete on this cost bases, rather than have power prices rise to allow alternative energy source to be competitive. It is understood that the state power company [PLN] is now developing a plan to look for alternative energy sources for hundreds of small diesel power plants scattered throughout remote parts of Indonesia, and that there are plans to introduce rooftop solar panels in 70 government institutions for a budget of Rp 210 bill ($ 14.5 mill). The Adaro coal mine is supporting research into alternative energy, through running a trial roof top solar power system to replace one of its isolated diesel generators, wherein this long-term study may be helpful for PLN’s broader ambitions.

Indonesia’s main coal producing competitors [Australia, South Africa] are largely reliant upon underground coal mining of immense reserves, rail systems and highly productive ports for large ships. Indonesia is strongly competitive with plentiful open pit coal reserves, sophisticated mines, cheap barging and well managed off-shore ship loaders. The export of Indonesian coal has a significant role in subsidizing the consumption of domestic coal – through economies of scale, along with various industry support requirements. Indonesia has developed a special low heating value (CV) export market in Asia. Australia, Russia and others focus on the higher heating value coal market segment, in part due to the relative shipping cost and the types of coal mined in these countries. Indonesia has some high heating value coals, that could compete in these international markets, but open pit reserves are shrinking. Indonesia has some underground coal resources and a few underground coal mines.

Perhaps we can now have a discussion to switch the focus from trying to turn coal into something else, to emphasizing research into the next generation of underground coal mines. 

The future of Ore Exports.

The old cold war policies of strategic minerals are re-emerging, as kicked off by the West’s reliance on China for certain Rare Earth Elements (REE). The enthusiasm over new batteries has stimulated global exploration to find and develop alternative sources of REE and other minerals. Indonesia is caught up in this frenzy to find REE, and its position as a significant source of tin and nickel is also caught up in this frenzy. Webinars show that Indonesia’s policy to ban raw nickel and tin ore exports is working well, and reflects well upon the forward-looking government policy.

The introduction of the raw ore export policy started formally with the 2009 mining law that adopted a “one size fits all” approach. This program has rightly been amended to adjust to some economic realities, such as allowing Aneka Tambang to continue some raw nickel ore exports. More recently the ministry has adjusted its schedule of allowing raw ore exports, in conjunction with smelter construction, to be extended as impacted by the corona19 virus restriction on development. This one-size-fits-all policy of raw ore export ban has not worked well in the area of complex base metals and other minerals, with many mining projects stalled, and thus unable to deliver any benefit to the Indonesian people.

In response to the virus negative impact on the global economy, Indonesia further needs to stimulate the economy along with national and local development. New mining projects are a proven way to achieve such development ambitions. Perhaps this is a good time to discuss further revisions to the raw ore export policy.

The future of marketing Indonesian commodities.

Marketing forces for commodities are always on the change. Recently there is a global shift towards protectionism.

Indonesian nickel products are amongst the cheapest in the world, with some leading protectionist policies from China and Europe. One example is that the European Union [EU] is now looking to impose a carbon import tax on Indonesian nickel products, reflecting the coal power used in smelting such nickel products. This EU protectionist policy has previously been seen in other commodities. The EU previously encourage the use of bio-fuels as an environment friendly alternative to fossil fuels. When it was found that European farmers production of bio fuel was more expensive than imported biofuel from Indonesian palm oil, then the European lobby to protect its farmers was developed around banning Indonesian palm oil based on claims of restricting deforestation.

Webinars show us that Vale uses hydro-electricity, and Aneka Tambang and others are looking at developing hydro power, but this direction to hydropower is not certain and will take many years.

The Indonesian foreign service, with its global network of embassy’s, has been encouraged to emphasize the development of international trade.  Perhaps broader and deeper discussion on marketing of Indonesia’s mineral commodities could be a discussion topic.

The future of key minerals.

Several industry presentations have looked at the future for Indonesian strategic minerals, using the standard criteria on risk to supply, and use in industry. Indonesian discussions have centred around such examples of finding REE to sell into world markets. Another approach may be to see what minerals Indonesia can develop domestically to offset imports. The simplest example may be salt for the food and chemical industry. Other examples of chromium and manganese were identified in a recent webinar, to support the Morowali stainless steel industry, as local supplies were found to be unreliable and insufficient. The recent Coal Asia article identified that Indonesia imports around $ 1 billion per year of phosphate products, principally for the fertilizer and food additive industries.

This is certainly an opportune time to discuss how the Mines Department and industry can work together to stimulate the exploration and development of such “key” minerals, in support of the balance of payments and grow domestic industries.

The future of Exploration.

Numerous webinars are in agreement that mineral exploration could, and should, be far more active. The Mines Department has crunched the numbers and found some commodities like coal, nickel, bauxite have long term resource / reserve potential. Webinars indicate that even these plentiful minerals need to further examine quality parameters, and turn resources into reserves. Changing global outlook over toxic trace elements, processing and a range of environmental, social and governance concerns may undermine some of Indonesia’s established resources / reserves.

The moratorium on issuing new metal mineral tenements, new regulations on processing, ownership etc has made greenfield exploration less attractive, even for Indonesian industry giants. The Mines Department recognizes the importance of the exploration sector, and has introduce a range of measures that seem to be relatively ineffective in stimulating the exploration industry. The oil & gas sector is experiencing the same downturn in exploration that is predicted to eventually lead to an end of the industry. Some recent oil & gas webinars have called out the regulators, in that it is now too late for incremental changes, wherein radical change in exploration and development policy is the best way to revive the failing oil & gas industry. Perhaps much of the mineral and coal industry is not yet facing its “sunset”, but the warning signs are there.

Every day is a good time to discuss how to meaningfully reinvigorate exploration in all sectors of the mineral industry.

Conclusion.

The ongoing spate of fantastic webinars has highlighted Indonesia’s wealth of mature industry talent, and are well connected to experts around the world. The Mines Department, and related government departments, also have well qualified and highly knowledgeable experts that understand the working of the industry. Webinars provide transparent input from a wide variety of industry advocates to the policy makers. The bottom-up call for progress is loud and strong.  What is hoped for is the top-down elite to listen, and be brave to change policies to allow the mining industry to grow optimally.

These webinars show us the global mining industry is constantly changing, and can impact Indonesia in a positive or negative way. Ongoing discussions between the Mines Department, industry and stake holder groups are an essential part of socializing and adapting to change.

The webinars are a great stimulus tool, opening our eyes to many facets of the mining industry, ultimately making the mining industry a more exhilarating profession.