Indonesia boasts a wealth of mineral resources, while its energy reserves promise to catapult it to a far more important position in the global economic order in the near future. Several world class mines operate in Indonesia. They are regulated under the contract of work system. A new mining law currently being debated in the House of Representatives is expected to maintain the contract of work system for major projects, while smaller ones will be subject to a licensing process that will be controlled by regional governments. Performance wise, these companies have done extremely well in the recent past due to the surging prices of metals on international markets. As a result, these companies have hatched expansion plans in a bid to improve efficiency and increase production. Exports of the metals nickel and copper accounted for around 5.8% of Indonesia’s total non-oil and gas exports in 2007, while exports of coal accounted for around 7.2% of the total non-oil and gas exports.

PT Freeport Indonesia operates gold and copper mines at Tembagapura in Papua and there is another major gold and copper mine operated by Newmont Corp. in Sumbawa in West Nusa Tenggara.

Nickel is another important mineral resource. There is a major mine operated by PT International Nickel (Inco) at Soroako in South Sulawesi. In the same province, Rio Tinto has plans for a new project. Elsewhere, state-owned PT Aneka Tambang is planning a nickel laterite mine at Halmahera in North Maluku in a joint venture with BHP Billiton, while Aneka Tambang is looking to develop a bauxite deposit at Kayan in West Kalimantan in partnership with a Russian firm.

Indonesia is the second largest producer of tin after China, but is the world’s largest exporter of the metal which is used extensively in the electronics industry. As such, developments in Indonesia have a major impact in influencing tin prices on the international markets. Two companies, PT Timah and PT Koba Tin, dominate the production of tin from the islands of Bangka and Belitung.

While metals are an important component of Indonesia’s mining industry, coal mining has come from virtually nowhere over a space of a mere 15 years to make Indonesia the world’s largest producer of thermal coal. Coal output is predicted to rise to 205 million tons this year from 193 million tons last year, with higher prices in an energy-conscious world boosting returns for producers. It is no wonder that most coal players are attempting to increase production. To finance their expansion plans companies have either turned to the banks or the capital market. Last year, the coal-mining firm, PT Indo Tambang Raya, listed on the stock exchange. Looking ahead, several more new listings are in the pipeline this year.

Geothermal power is another source of energy that is currently being developed. Indonesia possesses some 40% of the world’s resource, and rising energy prices are increasing the feasibility of geothermal projects.