Five projects in mineral and coal worth in total Rp 84.7 trillion ($9 billion) are expected to break ground in Indonesia next year, according to a document from the Energy and Mineral Resources Ministry.
The five projects are part of the Rp 4,000 trillion Master Plan for the Acceleration and Expansion of Indonesia’s Economic Development (MP3EI), which divides Indonesia into six economic “corridors” and assigns each one with sectors to focus on for economic growth.
Ministry official Tatang Sabaruddin said the projects are expected to create “value added to the economy” and infrastructure development.
“In a bid to develop the projects, the government’s money will be complemented by that of state companies and the private sector,” he said recently.
A document obtained by Investor Daily shows the five projects include a Rp 40 trillion gold and mineral mining project in Sumbawa owned by Newmont Nusa Tenggara, partly owned by the US-gold miner giant Newmont Mining.
The document also shows AGB Mining, a South Korean company, investing Rp 2 trillion in a manganese smelter in Kupang, East Nusa Tenggara.
There is also a project from nickel miner Vale Indonesia, which will build a nickel ore refinery in Bahodopi, Central Sulawesi. The project, according to the document, is worth Rp 16 trillion. Another is a coal transportation project worth Rp 4.5 trillion by MEC Coal.
As a ban on the export of unprocessed commodities comes closer to its 2014 implementation, there will be a boom in new smelters in Indonesia, a senior ministry official said in February.
The official, Thamrin Sihite, said in February that 12 new smelters will enter operation by the end of 2014.
The ban was introduced in order to encourage miners to add value to the nation’s mineral resources and stimulate economic growth by compelling miners to build processing facilities.
Some miners, however, have said that the government has not given them enough time to prepare.
Bastary Pandji Indra, director of the public-private partnership program at the National Development Planning Agency (Bappenas), said in June there were 805 projects under the MP3EI so far with a total value of Rp 1,768 trillion.
He said around 51 percent of the investment will come from the private sector, 21 percent through PPPs, while state enterprises will make up 18 percent and government 10 percent.
Lydia Hardiani, an official at the Energy and Mineral Resources Ministry, said on Sunday some of the projects have started construction. “Progress of MP3EI projects are moving forward significantly,” she said.
The financial success of resources projects often depends on the global prices of the commodities being extracted. While China’s rapid development has driven up prices for many key minerals in recent years, that trend is showing signs of reverse amid a global economic slowdown.