Indonesia is the largest producer of minerals in Southeast Asia and the primary market of interest for the Australian mining equipment, technology, and services (METS) sector in the region, according to Austmine.
The Australian Government has identified the region as a major opportunity for Australian businesses in its Southeast Asia Economic Strategy to 2040.
This strategy recognises the significant economic growth prospects in Southeast Asia, considerable political and social relations, and potential to increase two-way trade and investment.
Resources have been identified as a priority sector in this strategy.
According to Austmine, which is a not-for-profit association for the Australian METS sector, mining is a central pillar of Indonesia’s economy, accounting for 9% of GDP in 2023.
“It is fundamental to industrial and social development, providing employment to millions of workers, significant government revenue, and integral raw materials for manufacturing and emerging industries,” an Austmine report notes.
Indonesia’s mining industry growth has fluctuated in recent years due to global demand variations, infrastructure constraints, regulatory changes and complexity of orebodies.
Yet Austmine says the outlook remains strong, and the sector will underpin continued growth and development of priority economic sectors, such as manufacturing, energy, construction, transportation and infrastructure.
This not only encompasses supply of minerals and resources to fuel industrialisation and economic development, but also the role of Australia’s METS sector in supporting the development of minerals industries in Southeast Asia.
“Indonesia dominates the global nickel market, ranking far ahead of competitors for both production and reserves. Historically, the country has produced nickel pig iron (NPI) and ferronickel for use in stainless steel and nickel-alloy products,” Austmine says.
However, Austime says producers are increasingly targeting the electric vehicle (EV) battery market and various supply agreements have been signed with global brands, such as Tesla, Ford, LG and Hyundai.
“This has positioned Indonesia as a strategic player in the global shift towards clean energy transportation,” the association reports.
Indonesia is amongst the world’s top copper and gold producers. Austmine notes the future success of the industry relies on optimisation of underground mining, enhancing smelting and refining capacity, and encouraging continued foreign and domestic investment for exploration.
Copper and gold projects were historically open pit mines, but are increasingly transitioning to underground operations, which Austmine notes is presenting opportunities for Australian METS companies.
Indonesia is one of the world’s largest thermal coal exporters. Its coal is also utilised for domestic consumption as electricity generation and in the production of steel, cement, and textiles.
“While Indonesia has set in place diversification strategies to transition to cleaner energy, the immediate outlook for coal remains strong, and in 2024 production is projected to exceed 700 million tonnes,” the association says.
Significant reserves, still relatively underdeveloped
While mineral reserves in Southeast Asia are significant, the mining industry has remained relatively underdeveloped.
Historically, mining has fluctuated as a priority for governments in the region and they have struggled to balance economic growth and diversification opportunities with potential impacts on biodiversity, agricultural industries and local communities. However, several countries have identified mining and resources as strategic sectors of growth.
One such country is the Philippines, which has repealed various regulations that stunted mining development and have promoted the sector as a driver of economic growth.
The Department of Mineral Resources of Thailand recently reported more than 30 trillion tonnes of mineral reserves, while governments in Cambodia, Laos, and Vietnam are seeking to advance legislation that promotes investment and encourages sustainable development of minerals industries.
However, as Austmine notes Indonesia is by far the most advanced mining nation in Southeast Asia. Mining has been a central pillar to its economy since the 1960s, and Australia has played a pivotal role in developing many large-scale coal, copper and gold projects.
As global demand for battery minerals intensifies, Indonesia has identified its significant nickel reserves and downstream production as opportunities for the next wave of minerals industry growth.
The Australian METS sector is already considerably engaged in the region, primarily through Indonesia, and these developments provide opportunities to deepen business relationships. Australia’s innovative mining solutions and unparalleled technical expertise provide strong competitive advantages in pursuing opportunities in the region.
However, support is needed to assist companies to overcome challenges, such as increasing competition, cultural complexities, and insufficient market connections and understanding of the resources sector.
This report seeks to identify the primary opportunities for the Australian METS sector in Southeast Asia and recommends strategic actions and initiatives that the government can undertake to support increased trade and investment in the region.
In compiling this report, Austmine has conducted substantial analysis of the needs and challenges in Southeast Asian mining markets. This has included secondary desktop research, along with primary research through interviews with 12 key mining customers and stakeholders in Southeast Asia, and a survey of METS companies conducting business in the region, which was completed by 36 businesses.
Austmine exists to promote the global advancement of technology and innovation in mining, and support members so they can achieve greater success. Through strategic initiatives and international collaborations, Austmine fosters the growth and influence of Australian METS companies in key global markets, ensuring they remain at the forefront of industry advancements.
Write to Adam Orlando at Mining.com.au
Images: Austmine
