Commodities

The Central Bureau of Statistics (BPS) is scheduled to release export-import data for the first quarter of 2024. We don’t expect surprises with slowdown in both export and import due to changes of commodity prices. 

Last year, the Government’s decision to issue Government Regulation (PP) No. 26/2023 concerning Management of Sedimentation Products in the Sea has generated controversy and rejection from many parties. At the heart of the problem was the existence of an article permitting the export of sea sand to foreign countries when sand export activities had been prohibited through a Decree of the Minister of Industry and Trade in 2003, during President Megawati’s administration. Unfortunately, just like many other problems, the purpose of forming the PP as a whole has been sidelined because of the commotion. Despite the initial rejection, this week the Government has determined water locations where sedimentation management will be carried out; interestingly, far from media coverage.

Bumi Resources (BUMI), the largest coal producer in Indonesia, booked net profit of US$10.9 million only last year, crashed from US$525.3 million in 2022. Second largest coal miner Adaro Energy (ADRO), in the meantime, posted net profit of US$1.64 billion last year, fell from US$2.49 billion in 2022.

Minister of Investment/Head of the Investment Coordinating Board (BKPM) Bahlil Lahadalia revealed two conditions for extending PT Freeport Indonesia’s (PTFI) special mining business permit (IUPK) which will expire in 2041. Bahlil said, first, the government asked Freeport to build a smelter in Papua. The reason is, so far Freeport has built smelters outside Papua, while Freeport’s mines are in Papua.

Minister of Investment/Head of the Investment Coordinating Board (BKPM) Bahlil Lahadalia said he had received the draft decree on nickel producer Vale Indonesia (INCO)’s contract extension. That said, the fate of extending the contract of work (KK) into a special mining business permit (IUPK) would be finalized after the 2024 Eid holiday or Eid al-Fitr 1445H.

Nickel was last traded at US$17,405 per ton this week on the London Metal Exchange (LME). The price might push more nickel producers out from the market, but will take a longer time to absorbe additional supplies from Indonesia in the coming months. 

The Indonesian Coal Mining Association (APBI) believes that the coal market in China is still prospective for Indonesia amidst slowing demand. APBI Executive Director Hendra Sinadia projects that China’s coal imports in 2024 will decrease compared to 2023. This is because China’s domestic coal production continues to increase every year.

The new administration will inherit an enlarged deficit in oil and gas. In the first two months of 2024, the deficit expanded by 15.9% to US$3.06 billion as export declined 2.24%, while import increased by 10.4% from the corresponding period last year. It is a big test for Prabowo Subianto to deliver his campaign promises to stop import petroleum fuel.

State nickel producer Aneka Tambang (ANTM), suffered from fraud and corruption cases in the past few years, sets a ferronickel production target of 22,464 tons this year, an increase of 5% from the unaudited realized output last year. 

Bayan Resources (BYAN), coal miner controlled by tycoon Low Tuck Kwong, paid out US$1.8 billion of cash dividends last year, surged by 80% from 2022, making Dato’ Low as among the cash richest persons in the country. Payments to the State (tax and royalties), unfortunately, increased only by 22.5% to US$1.15 billion.