Indonesian mining industry at a crossroads: PwC

Indonesia?s mining sector continues to make a valuable contribution to the country?s economic and social progress despite deterioration?s in all indictors of profitability during 2001. Employees, suppliers, regional communities, and government all share in the wealth created by mining companies, according to a report released on Wednesday by PricewaterhouseCoopers.

?Our mining sector is internationally cost competitive. The sector has been able to expand production in the face of soft world mineral prices,? PwC senior mining partner Firdaus Asikin said in a statement.

Asikin further stated that the Indonesian mining industry is at a crossroads. Apart from coal little, if any respite is expected from already depressed mineral prices and continuing political, economic and social issues in Indonesia together with an uncertain regulatory environment are likely to have a negative impact on the industry as a whole.

Over 98% of the sector?s employees are Indonesian nationals. In 2000, the most recent year covered in the PwC report, mining companies spent more than Rp 127 billion on employee training, Asikin added.

The government?s share of the wealth created by the mining sector in 2000 was almost US$802 million.

From 1996 through 2000, the industry generated an annual average return for its shareholders of about 11%.

?This return is important for a number of reasons?, according to Asikin. ?It represents a reward that is commensurate with the high risk faced by the industry. And, it also permits the shareholders to reinvest in Indonesia?s mining sector.? (godang/robert)