Indonesia outstrips competition

A survey has found that Indonesian mines achieve higher rates of return than operations elsewhere in the world.

The PricewaterhouseCoopers study shows that during the period 1994-1998, companies included in the survey achieved average returns of 8% on total assets employed, and 17% on total funds employed.

Similar studies by the firm examining Australian and British Columbian operations showed lower returns in those markets. In 1998, for example, Indonesian companies averaged a 7% return on assets, compared with 1% for Australian companies and a negative return of 4% for B.C. companies.

The report predicted that Indonesia would soon become a major player in the coal industry. Six years ago, it produced less than 20 million tonnes to the export market. This year’s exports are expected to exceed 50 million tonnes and will likely approach South African tonnages in the next few years. Indonesia may even overtake Australia in thermal coal exports within a decade, the report adds.

Indonesia is the world’s second-largest producer of tin, the third-largest thermal coal producer and copper producer, and ranks fifth and seventh in nickel and gold production, respectively.

On the exploration front, expenditures have tumbled since the Busang project was found to be a fraud. More than $200 million was spent in 1996 and 1997; however, this number was halved to US$100 million in 1998.

The reports says the withdrawal of juniors from hundreds of projects has opened up “tremendous opportunities” for majors to step in and work these areas.