Addressing the Melbourne Mining Club dinner at the event yesterday, Tigers Realm Coal chief executive Tony Manini said Indonesia was poised for an era of economic growth that would transform it into the world’s top 10 economies.
 
The speech drew comparisons with Chile, where mining has been the catalyst for a doubling of the economy over the past decade.
 
Manini noted the parallels, as both countries were on the Pacific ring of fire with similar mineral endowments, while highlighting a fall in Indonesia’s copper and gold earnings over the last decade compared with Chile’s success in making minerals account for half of all export revenues.
 
Manini said Indonesia could be “the Chile of Asia” if it could increase its disappointing mining investment to the levels enjoyed by its South American counterpart.
 
“Indonesia must get value from its minerals industry,” he said.
 
“We need to develop a framework that is attractive to investors and which delivers for Indonesia.”
 
This framework would address key impediments identified by Manini to include a change in divestment requirements from 20% to 51% after five years in Indonesia, viewed by investors as inadequate reward for the risk capital deployed.
 
Other investment roadblocks include an in-country processing requirement, expensive and time-consuming forestry permits and a lack of clarity in licencing procedure.
 
Manini also said there was limited understanding of the difference between exploration and mining, as well as a lack of recognition that exploration is the lifeblood of the minerals industry.
 
These technocratic issues were put in the context of a survey of 742 mining and exploration companies, which rated Indonesia ahead of Chile in mineral prospectivity.
 
“The impediments are regulatory,” Manini said.
 
“The same survey that revealed Indonesia to be more prospective than Chile rated it 80th in attractiveness for investment when regulatory issues are taken into account.”
 
Anticipation around possible policy changes in Indonesia has peaked with the recent election of president Joko Widodo and his appointment of new leadership in top economic ministries.
 
Indonesia is Australia’s largest export market for the mining equipment and technology services sector.
 
The country hosts 41 ASX-listed companies with interests in 128 mining projects.
 
Ozmine aims to bring together key Indonesian, Australian and ASEAN industry and government players to identify and analyse major trends, opportunities and challenges in the mining sector across the southeast Asian region.