Sumatra’s Mining Industry: A Promising Future

Along with the rise in the pricing of the commodities produced by the mining sector, the mining industry still holds as one of Indonesia’s most profitable industries. 

With the positive outcome, the government intends to expand the mining industry to a greater scale for advanced economic development. 

Indonesia’s government has taken several measures, such as banning the export of unprocessed mining products and boosting downstream activities that involve turning raw materials into finished goods with value-added. 

This has the effect of raising the price of Indonesian mining products. Additionally, by implementing this strategy of downstream operations, greater employment possibilities, higher profit margins for mining products, and carbon emissions reduction are anticipated.

Mining Industry Potential in Indonesia

Indonesia ranks third globally as the largest coal producer, following China and India. 

In 2021, Indonesia saw a significant increase of 8.9% in coal production and was projected to continue growing by 2.6% annually, reaching 629.9 million metric tons in 2022. 

The first half of 2022 saw an increase in coal demand from many EU countries, including Germany and Poland, due to the EU’s ban on fresh Russian coal imports. 

Russia has also prevented a large volume of gas from reaching Europe from September 2021. The European gas crisis brought a brief rise in coal usage for electricity generation. 

Coal Output Projection

Indonesia’s Ministry of Energy and Mineral Resources (ESDM) has established a coal production target of 694 million tons for 2023, representing a 5% increase from the 2022 target of 663 million tons, which has already been exceeded. 

According to the latest ESDM data, Indonesia produced 668.75 million tons of coal in the year to December 27, 2022, surpassing the year’s target. However, the actual output during the period is projected to be even higher as some producers delay reporting their production volumes.

Although 2023 is expected to be a challenging year for exports, the administration expects growth to be favorable. The government expects the value of exports to increase by 12.8% and the importance of imports to increase by 14.9%. 

Read more: Indonesia Outlook 2023: Potential in the Mining Sector

Sumatra and Batam: Potential Business in The Mining Industry 

Mining and mineral have been valuable commodities in Sumatra. It even goes back to prehistoric times. 

The local populations and mainly international enterprises have participated in exploring the mining industry in the region. For quite some time, the mining sector in Sumatra has been dominated by gold. 

Therefore, the Indonesian government recently issued a new regulation that reveals incentives for coal-producing companies in the form of exemption from royalties imposed.  

Sumatra’s Prominent Business Players

Several big players in coal mining are PT Bukit Asam Tbk which operates from Tanjung Enim in South Sumatra. PT Thriveni also makes a list as one of the primary coal producers. 

Batam Mining Industry 

Batam also has excellent potential in the mining industry and has already developed some key players focused on large production to meet customer needs.  

Batam’s Prominent Business Players 

Batam has allowed Australian Blue Steel Industries to penetrate its market. Blue Steel focuses on producing mild steel products, not part of the mining industry. 

However, the steel industry utilizes products from the mining industry. Blue Steel Industries has over ten years of experience and is set to begin its operation in the Taiwan Kabil Industrial Zone. 

The Biggest Copper Mining Producers in Indonesia

Besides two regions on Sumatra island, Indonesia is abundantly blessed with ample natural resources, making mining a massive sector of the economy. 

Indonesia is home to several areas that are primarily renowned for their copper production, such as:

Papua

The Grasberg Mine, located in Tembagapura, Mimika, produces copper that amounts to 1.33 billion pounds or 670 thousand tons. This figure is expected to increase exponentially in 2023 to 1.7 billion pounds of copper. 

There is an optimistic expectation that the demand for copper will continue to grow. This expectation is in line with many projects for renewable power plants. 

Gorontalo 

Following Papua, the next largest copper-producing area in Indonesia is Gorontalo in North Sulawesi. Copper production in North Sulawesi is estimated to reach 693 thousand tons annually. 

A whopping 30% of North Sulawesi is a mining area for copper, alongside other minerals. 

Pacitan

Pacitan, located in East Java, is also a significant copper producer. On average, the production of mining products reaches up to 50 tons per year. The mining products produced by Pacitan include gold, copper, and tin. 

Wonogiri

Wonogiri of Central Java is especially famous for its copper mining activities. The region produces up to 1.8 tons of pure copper sand and 21 tons of raw copper every month. 

Cikotok 

Copper mining in the Serang, Banten region began in 1839 under the reign of the Dutch colonial administration. 

Until 2018, PT Aneka Tambang Tbk ran the copper mine in Cikotok and produced 569 thousand tons of gold and copper. However, it has since been permanently closed.

Silungkang

One of Indonesia’s copper-producing locations is Silungkang in West Sumatra has a mining area of around 3,102 hectares. The Silungkang mine generates 419 thousand tons of copper yearly, on average. 

Although Indonesia has a variety of profitable sectors, its mining sector is worth exploring, considering the ample growth it has and will continue to see. 
Businesses looking to explore these sectors may seek the help of InCorp Indonesia (formerly Cekindo) for company registration and business license matters.