DMC with PwC Indonesia on Mine 2024

The 63rd Djakarta Mining Club (DMC) gathering was held on the 23rd of July. This networking event was attended by around 100 of Indonesia’s exploration and mining executives and business associates. Sacha Winzenfried of PWC [Energy, Utilities & resources and energy transition leader] gave a great technical presentation “Mine 2024- Preparing for Impact”. This was PwC’s 21st annual review of the world’s top 40 mining companies by stock value. Trends in the mining industry, as reflected by these companies, were analysed and outlined. See; Mine 2024: Preparing for impact (pwc.com)

The report highlights;

·        The industry is preparing for impact- retooling and reimagining itself to be a key contributor to sustainable growth. In 2023, the top 40 ‘s financial performance was squeezed by falling commodity prices and rising costs. Revenues fell more than 7%, even as production of key commodities rose – a trend projected to continue into 2024. [ note that 2 of the top 40 companies are in Indonesia]

·        The percentage of completed mining deals involving the top 40 that were focussed on critical minerals rose 40% in 2023 from 22% in 2019, underlying the seismic shift driving M&A activity. Coper and lithium dominated such deals, accounting for over 70%of them by volume, up marginally from 2022.

·        Urban mining, or recycling, is a powerful trend underpinning the demand that miners will want to supply if they are to remain profitable and competitive.

A discussion panel follower between Ben Lawson, vice chairman Djakarta Mining Club, Sacha Winzenried, Energy, utilities & resources and energy transition leader PwC Indonesia, Ali Tesalonika, Marketing director PT. Indexim Coalindo (coal), and Aldo Namora, General manager of business development and risk management PT. Ceria Nugraha Indotama (nickel). Selected notes include;

·        The broad global negative perception of coal mining is over rated, as Indonesian coal companies will continue to thrive for a significant time. The coal companies are recognized as a critical part of Indonesia’s past, present and future.

·        The recent history of great coal production & profits has led the government into a cycle of increased fees, taxes and compliance issues. The industry is concerned on how the government will react during future price downturns.

·        The Indonesian nickel mines need to continue to improve efficiency to maintain profitability during the apparent global over-supply trends.

o   AI is seen as one path to reduce costs, and improve reliable productivity.

o   Other programs include land clearing optimization that use geophysics to assist in selecting optimal areas for mining.

o   Nickel miners are keen to see progress on the governments plan to develop an Indonesian nickel price index.

o   Nickel miners looking to hybrid mining equipment to reduce fuel costs, and improve their environmental image.

·        All miners are concerned about cyber security, not only on trade data, but also on-site operations. Back up systems need to be further developed.

·        PLN is moving slowly towards promoting nuclear, but this is likely to be developed for expanding new power requirements, rather than replacing coal. Indonesia’s solar availability is only 5.5 hour per day, but in practice achieves 3 hr 50min in some trials. Rain and such can reduce this even further – particularly in the wet season.

·        AI may be used in the Coal Trading industry, though most traders are adequately familiar with each regions coal quality characteristics.