MAC: Mines and Communities

"Global mining industry picking up"

Published by MAC on 2003-07-31
Source: Jakarta Post ()

"Global mining industry picking up'

Fitri Wulandari, The Jakarta Post

July 31, 2003

Jakarta - The global mining industry is on the rise again due to strong demand from the growing economies of China and India, a mining association said on Wednesday.

Paul L. Coutrier of the Indonesian Mining Association (IMA) said that the mining industry had suffered a slump during the 1990s, which had prompted many experts to call it a "sunset industry".

The slump happened because of a decrease in demand from the United States, the main consumer of mining products, which had reached the peak of its "new economy" growth during the 1990s, something that resulted in reduced interest in manufacturing industry.

Instead, during the period, the Americans were more interested in intelligence-based industries, which allowed them to rake in huge profits by selling copyrights.

However, in 2002, in line with the growth of China's and India's economies, global demand for mining products started to pick up, Coutrier said.

"The global mining industry is repositioning itself. Within the next five years, the mining industry will be up again," he said during a discussion between the association and The Jakarta Post.

Coutrier explained that with populations of 1.5 billion and one billion respectively in China and India, these countries were projected to have mushrooming incomes per capita, which would enable them to buy consumer products, such as cellular phones, whose components were mostly made of mining products. They would also need more mining products to support their growing manufacturing industries.

According to Coutrier, a number of new players in the mining industry had sprung up, including Vietnam, Laos, Cambodia and South Korea.

The new developments in the global mining industry should have served as a wake-up call for Indonesia, whose mining industry had been in the doldrums for years, Coutrier said.

Jeffrey Mulyono, the chairman of Indonesian Coal Mining Association (ICMA), said that unless the government worked to revive the industry, Indonesia would lose out on the opportunity to compete in the global mining industry.

"Don't let us lose opportunities in the mining business again," he remarked.

The country's mining industry has received very little investment for the last ten years while no new exploration had taken place during the past four years, he added.

On top of that, many mining companies were about to stop operating due to declining resources. Most mining companies in Indonesia have been operating since the 1970s and 1980s.

For example, gold mining companies PT Kelian Equatorial Mining and PT Newmont Minahasa were closing their mining operations in East Kalimantan and North Sulawesi respectively.

Due to the worsening investment climate, the IMA said Indonesia's ranking in the mining sector had continued to drop. Indonesia was now ranked 27th out of 35 countries surveyed in 2001-2002 by an international consultant, the Fraser Institute of Mining Companies, in terms of the "attractiveness" of their mining sectors.

Mineral production had remained unchanged since 2001. A report from the Ministry of Energy and Mineral Resources revealed that gold production had dropped to 142,238 kilograms in 2002 from 162,605 in the previous year, while ferronickel output fell to 8,804 tons from 10,302 tons

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