Slowing market demand and the international financial crisis have caused significant drops in gold, sliver, tin and copper production in Indonesia in recent months and also forced companies to revise down their targets for 2009, ministry officials said on Tuesday.
Total revenue projections for the energy and minerals sectors next year are 21 percent lower than in 2008, while mining output should remain stable, the officials said. However, total revenues for 2008 are still expected to increase by 36 percent from 2007, thanks to higher oil and gas prices earlier in the year.
But Bambang Setiawan, director general of minerals and coal at the Ministry of Energy and Mineral Resources, said that the coming year “could be hard for us.”
“The prices of mining commodities are currently below the production costs,” he told a year-end news conference with Minister of Energy and Mineral Resources Purnomo Yusgiantoro and other officials.
Bambang said the ministry still expects to earn the same amount of taxes and royalties in 2009 as this year, a figure that is estimated at about Rp 42 trillion ($3.86 billion).
Gold output dropped by more than half to 57.94 tons from 117.73 tons in 2007, due to landslides at the Freeport-McMoRan Copper & Gold Inc. mining site in Papua Province. Tin production also fell 13 percent to 79,210 tons on lower output by two major companies, PT Timah Tbk and PT Koba Tin. Copper production fell to 580,950 tons from 797,400 tons in 2007.
“For coal production, we revised down the output target for 2009 from 250 million tons to 230 million tons,” Bambang said.
The ministry still expects to contribute Rp 346.34 trillion to the state budget for 2008 despite missing its investment targets in the energy and minerals sector, Purnomo said during the news conference.
Oil and gas contributed Rp 303.06 trillion to state revenues this year, or nearly double that of 2007. Mining sector revenues rose more than 12 percent to Rp 42.12 trillion from Rp 37.34 trillion the previous year.
“The increase in revenue was supported by rising crude oil prices and a boom in mining commodities prices, such as coal, earlier this year,” Purnomo said. “For investment this year, we expected it could reach $21 billion, but up to December, we only booked $18.6 billion.”
He said investment in the energy and mining sectors this year was still higher than last year’s $15.75 billion.
Jacobus Purwono, director general of electricity at the Energy Ministry, said the recent credit crush had slowed investment in a number of electricity projects outside Java that are part of the government’s plan to generate an additional 10,000 megawatts of power by 2010.
Kardaya Warnika, an adviser to the minister, said that some energy firms delayed planned investments this year because they did not have the right equipment for exploration. “Land procurement problems have also hampered some projects,” he added.