Indonesia up date:
Progress of the NPI ramp-up, barriers to market
growth and outlook for future production
Hong Kong, 2016
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2016 Page 1
Table of Content
SECTION-1 : NICKEL OUTLOOK 2016 (Preface)
SECTION-2 : INDONESIA EXPORT BAN & DOWN STREAM INDUSTRY POLICY
SECTION-3 : CHALLENGES In INDONESIA NICKEL INDUSTRY
SECTION-4 : INDOFERRO : A COMPLIANCE OF DOWNSTREAM INDUSTRY POLICY
SECTION-5 : CONCLUSION
2016 Page 2
NICKEL OUTLOOK 2016
2016 Page 3
Nickel Outlook (1) Cost vs Price
It is believed that existing nickel price are unsustainable since more than half of global
producers are losing money at current prices.
Source : Bloomberg, WoodMackenzie, 2016
2016 Page 4
Nickel Outlook (2) NPI
Current market condition is considered
as super tough for most nickel
producers, it is believed that shortage
will come by the 4Q2016 and price will
start to moving away from floor price
USD 8,000 USD 8,500/ton
Most of NPI plants in China will be shut
down in 2017 due to high production
cost, feed shortage and environmental
compliance pressure.
It is predicted that there will be only
28 NPI plants operating in china by 2017
while there was 50 plants recorded in
2014. At the same time, production in
2017 will be cut +/- 40% compared to
2014.
Open source, 2015
2016 Page 5
Nickel Outlook (3) NPI
Top 3 NPI Producer 2015 :
1. Fujian Desheng
2. Shandong Xinhai
3. Tsingshan FuAn
Source : Wood Mackenzie 2015
2016 Page 6
Nickel Outlook (4) NPI
NPI Producer in
China 2016 (est)
NPI Producer in
China 2017 (est)
Source : Wood Mackenzie 2015
2016 Page 7
INDONESIA EXPORT BAN &
DOWNSTREAM INDUSTRY POLICY
2016 Page 8
Indonesia Export Ban & Downstream Industry
Legal Standing of Raw Material Export Ban & Downstream Industry Policy
Law No. 4 Year 2009 on Mineral & Coal Mining article 102 and 103 state that (i) it is a
mandatory to conduct added-value in any mineral and/or coal mining product (ii) it is a
mandatory to conduct processing and refining of mining product domestically (in
Indonesia)
Law No. 3 Year 2015 on Industry article 31 and 33 state that GOI (Local & Central
Government) supports down stream industry in a form of providing guarantee of the
availability and sustainability supply of natural resource required as raw material.
Since as then, dozens of implementation regulations are issued (Government Regulation
No.1/2014, MEMR Decree No.1/2014, MEMR Decree No. 8/2015, Minister of Trade Decree
No. 4/2014, Minister of Trade Decree No. 119/2015, etc). Those regulations mention all
aspects about the industry, such as :
The new regime on how to obtain mining concession & processing plant license
Divestment
Standard minimum of allowed export product
Eg. : NPI (min. 4%-Ni), Copper Cathode (min. 99%-Cu), Alumina (min 98%-Al2O3), etc
2016 Page 9
Indonesia Export Ban & Downstream Industry
To What extend has the export ban achieved its aims?
1. Effectively control raw material export, in particularly for nickel ore and bauxite
Source : Indonesia Statistic Bureau (BPS) http://www.bps.go.id/linkTabelStatis/view/id/1033
Non-renewable Mineral Conservation is met
2016 Page 10
Indonesia Export Ban & Downstream Industry
To What extend has the export ban achieved its aims?
2. Commodity prices especially nickel, was soared post implementation of the ban
Hypothetically, the ban helps nickel price not to become as worse as it should be in the
midst of weakening commodity market.
Nickel Price (USD/MT))
Production Cost 90th percentile
Production Cost 75th percentile
Production Cost 50th percentile
Source : Wood Mackenzie, 2015
Reason for The Expected Price Recovery
2016 Page 11
Indonesia Export Ban & Downstream Industry
To What extend has the export ban achieved its aims?
3. Lots of investment, mostly from foreign investor, are committed to build mineral processing
and refining facilities throughout the country PT. Sulawesi Mining
PT. COR Indonesia
Morowali Utara
Investment
Morowali
PT. Tinindo
Inter Nusa PT. Delta Prima Steel PT. Cahaya Modern
PT. Meratus Jaya
Bangka Belitung Tanah Laut Metal Industri Unaha
PT. Eunindo Iron Batu Licin
Usaha Mandiri - Konawe
Karimun
PT. Karyatama
Konawe Utara
PT. Refined Bangka Konawe Utara
Tin Bangka Belitung
PT. Fajar Bhakti Lintas
Nusantara Gebe
PT. Century Metalindo -
Cikande Banten
PT. Macika Mineral
Industri Konawe
PT. Bintang Timur Steel -
Selatan
Tigaraksa - Banten
PT. Antam
Pomala
PT. Indoferro - PT. Bintang Smelter
Cilegon - Banten Indonesia Konawe
Selatan
PT. Monokem Surya-
Kerawang
PT. IFA - PT. Kasmaji Inti PT. Smelting PT. Huadi Nikel Alloy
Purwakarta Utama - Mojokerto - Gresik Indonesia Bantaeng
PT. Titan Mineral
Bantaeng
PT. Gebe Industry
Nikel - Gresik
= nickel producer
Downstream Industry Progress is on track *blue boxes show nickel processing companies
2016 Page 12
Indonesia Export Ban & Downstream Industry
To What extend has the export ban achieved its aims?
4. Indonesia is starting to export refined nickel products, not only to existing conventional
market such as Japan and South Korea, now China is on the line.
China Imports Data
Commodity : Ferro Nickel
Origins Dec 2015 YoY (%) Jan - Dec YoY (%)
FY 2015+1Q2016, Indonesia has
As per Dec 2015 exported 326k of FeNi (or equivalent
Japan 7,036 1124.88% 72,109 87.89% to 32k of pure Ni) to China
New Caledonia 5,495 -8.65% 98,468 55.52%
Brazil 4,492 104.87 49,028 48.87%
Indonesia 2,728 -44.21% 213,842 2889%
Macedonia 2,472 6.42% 45,390 112.68%
Colombia 1,380 -53.90% 62,462 30.08%
Rep of Guatemala 1,370 0 8,788 0
Greece 941 0 941 0 Indonesias current refined
Myanmar 841 -86.91% 59,435 1.30% nickel producer
Ukraine 435 0 12,715 0 CMMI Wonua Morone NPI 0 1 2 3 3
South Korea 320 -64.82% 17,638 1487.87% PT Aneka - Pomalaa FeNi 20 18 18 17 17 20 23
Others (28) n/a 12,594 n/a PT Indoferro NPI 3 3 7 8 12
Total 27,482 -1.21% 653,410 130.94% PT Vale - Soroako 67 71 76 78 71 77 83
Tsingshan Indonesia NPI 22 35 45
As per March 2016 Total Indonesia 87 89 97 99 119 143 166
Origins Mar 2016 YoY (%) Jan - Mar YoY (%)
Source : internal research,2016
Indonesia 41,407 11778.35% 112,506 1625.82%
Colombia 9,903 39.50% 19,975 62.38%
New Caledonia 8,290 -23.39% 24,769 -9.34%
Brazil 4,181 126.03% 12,996 105%
Japan 1,606 -72.83% 8,837 -56.34%
South Korea 1,374 -61.37% 2,126 -71.53%
Rep of Guatemala 631 0 1,141 0
Others - n/a 5,184 n/a Source : china
Total 67,392 73.61% 187,534 54.69%
custom , 2016
Downstream Industry Is Taking Place
2016 Page 13
Indonesia Export Ban & Downstream Industry
New nickel projects are going to be delivered in 2016/2017 :
No Company Name Ore (wmt pa) Production (tpa)
1 PT. Indoferro (expansion) 1,000,000 250,000 / NPI
2 PT. Cahaya Modern 48,000 8,640 / NPI
3 PT Sambas Mineral Mining 180,000 12,000 / FeNi (25 % Ni)
4 PT Macika Mineral Industri 290,000 53,000 / FeNi (10 %Ni)
5 PT Karyatama Konawe Utara 250,000 50,000 / NPI (8-10% Ni)
6 PT Bintang Delapan 1,600,000 300,000 / NPI (10 -15 % Ni)
PT Fajar Bhakti LN 100,000 / FeNi
7 500,000
PT Gebe Sentra Nikel (10-16 % Ni)
8 Gebe Industri Nikel 300,000 6,000 Ingot Nikel / (99 % Ni)
9 PT. Antam (ekspansi) 800,000 10,000 FeNi / (30% Ni)
10 PT. Asia Mineral Mining 600,000 60,000 / NPI
11 PT. Pernick 100,000 10,000 / NPI
12 PT. Mapan Asri Sejahtera 300,000 30,000 / NPI
Total 5,968,000
Source : MEMR, 2015
2016 Page 14
Indonesia Export Ban & Downstream Industry
New nickel project are on the line (Construction progress < 30%) :
No Company Name Ore (wmt p.a) Production (tpa)
1 PT. Jilin Metal Indonesia (Billy Group) 390,000 45,000 / NPI
2 PT.Bososi Pratama 288,889 52,000 / Sponge Iron
3 Aquila Sponge Nikel (Solway Group) 1,256,173 81,400 / FeNi (25 % Ni)
4 Ang and Fang Brothers 210,000 21,000 / NPI
5 PT. Stargate Pacific Resources n/a 650,000 / NPI
6 PT. Cinta Jaya 61,667 18,500 / NPI (4 -6 % Ni)
7 PT. Trimegah Bangun Persada 500,000 100,000 / FeNi
8 PT. Nusajaya Persadatama Mandiri 133,333 36,000 / NPI (6-10 % Ni)
9 PT. Sambas Mineral Mining 180,000 12,000 / NPI
10 PT First Pasific Mining 2,000,000 200,000 / FeNi
11 Riota Jaya Lestari 450,000 80,000 / NPI
12 PT Genba Multi Mineral 900,000 180,000 / NPI
13 PT COR Industri Indonesia 1,600,000 3220,000 / NPI
Source : MEMR, 2015
2016 Page 15
Indonesia Export Ban & Downstream Industry
To What extend has the export ban achieved its aims?
5. Massive exploitation through open pit mines and forest destruction are
significantly reduced/stopped.
Campaign Good Mining Practice that Concern Environment Sustainability
2016 Page 16
CHALLENGES in Indonesia Nickel
Industry
2016 Page 17
Challenges in Indonesia Nickel Industry
There are challenges to develop nickel industry in Indonesia starting from geological or
location barriers to Government regulations.
Overlapping nickel concession
Unharmonious policies among Too many licenses and permits to be
1 applied
authorities
Issue of corruption &negative bureaucrats
Most of nickel mine are located in remote
2 Insufficient Infrastructures area.
Indonesia is in electricity deficit
None of Indonesias existing smelters are
granted with tax holiday though most of
3 Lack of investment incentives conditions to acquire such incentives are
fulfilled.
Based on prevailing regulation, Indonesia
Lack of understanding on nickel categorized nickel slag as hazardous and
4
processing industry toxic waste
INDOFERRO : A COMPLIANCE OF
DOWNSTREAM INDUSTRY POLICY
2016 Page 19
COMPANY OVERVIEW (1) Company Structure
PT INDOFERRO (INDOFERRO), pioneer and
leader of industrial-scale Blast Furnace
operation in Indonesia, commenced its Growth Steel
commercial production in August 2012 with Group
the installed capacity up to 250,000 MT pa
for NPI product or 500,000 MT pa for BPI
product.
As per FY 2015, INDOFERRO has sold 15,000
MT of NPI exported to China, Taiwan and
India.
PT Growth
PT Growth
INDOFERRO has positioned itself to one of PT Indoferro Sumatra
Industry Asia
the most efficient and low cost nickel
NPI producer, Construction Construction
producer in the country by developing and Steel producer Steel producer
operating its own coking plant and co-
generation power plant. Biomass
PTIndocoke
Power Plant
INDOFERRO is a subsidiary of the GROWTH
STEEL GROUP, which is one of Indonesias Metallurgical
coke producer
distinguised iron and steel producers,
established in 1969.
2016 Page 20
COMPANY OVERVIEW (2) Group Exposure
PT Growth Sumatra Industry PT Growth Asia
Location: Medan, North Sumatera Location: Medan, North Sumatera
Activities: Construction Steel Producer, Activities: Foundary, grinder producer
installed cap. 400,000 tpa
Biomass Power Plant INDONESIAN ARCHIPELAGO
Location: Medan, Jambi,
Pontianak
Activities: Operating, installed
cap. 15 mW x 8 unit
INDOCOKE Nickel, Iron and Steel Commodities
PT INDOFERRO
Location: Cilegon, Banten Metallugical coke and coal
Location: Cilegon, Banten Activities: Metallurgical Coal,
Activities: NPI producer, installed installed cap. 400,000 Biomass Power Plant
capacity 250,000 tpa (1st tpa
phase) ; 350,000 tpa
(planned post 2nd phase
expansion)
r
2016 Page 21
Our 2nd Phase Expansion Plan
Project Highlights Key Information
Location : Cilegon, Banten +/- 95 km from Capital Expenditure
Jakarta (via Jakarta - Merak highway) (Including EF, Sintering
Product : High Grade NPI (12%-Ni) line, ore prep, facility,
Approx. USD 200 Million
dust control facilities,
Capacity : 100,000 ton NPI product per annum
etc)
(12,000 ton Ni equivalent)
Construction 4Q 2014
Raw Material Consumption :
apprx. 1,000,000 WMT of nickel ore Commissioning 4Q 2016
Project Owner : Indoferro (100%) Commercial Operation 2Q 2017
Project Desc. :
Brownfield expansion project that increases
Indoferros installed capacity to 20,000 ton
Ni equivalent per annum. Current Status :
Implementing modern Electric Furnace - Land Preparation (100%)
technology to produce high grade NPI - Engineering and Procurement (100%)
product
- Financial (loan) Closing (100%)
Competitive capital expenditure, as project
- Current stage : Construction
is located in an industrial area with well
developed infrastructures.
2016 Page 22
Conclusion
2016 Page 23
CONCLUSION
Raw Material Export Ban and Downstream Industry Policy applied by GOI is on track, not
necessary to step backward by allowing ore export relaxation program.
Indonesia has all the potentials to be the major processed nickel producer in world and
may emerge to be one of the biggest processed nickel manufacturer within 5 years in Asia
other than China, South Korea and Japan.
Fact that Indonesia is now dominating Chinas major Ferronickel supplier is a confirmation
that nickel downstream industry do taking place in Indonesia.
There are challenges and obstacles to conduct nickel investment in Indonesia that are
urgently to be solved by stakeholders.
2016 Page 24
THANK YOU
http://www.indoferro.growthsteelgroup.com/
2016 Page 25
