What are the opportunities for the gold industry in Indonesia?

Keywords: Gold Industry, Gold Investment, Gold Indonesia

Source: Arab News 

Home to abundant natural resources like nickel, coal, and copper, Indonesia is also a major gold miner. Being one of the world’s largest gold mines, the country has a vibrant physical gold market ecosystem with an internationally accredited gold refinery, a large gold jewelry sector, and wide availability of retail investment gold bar products for distribution.

With this issue in hand, how is the demand for gold in Indonesia? What are the prospects for the gold industry? Read this article to find out more!

Overview of Indonesia’s Gold Industry

In December 2020, Indonesia’s gold production was reported at 130,000.000 kg, which was surprisingly a decrease from the previous figure of 139,000.000 kg for December 2019. Most of Indonesia’s gold output comes from the Grasberg mine, located in Papua. From this, we could say that Indonesia has a competitive and active domestic market for gold, which many locals see as a form of savings, rather than investment. 

Despite economic uncertainty, investors in Indonesia have been using gold as a safe place to protect their wealth. This could be proven by the fact that purchasing gold in Indonesia is as simple as going to a local e-commerce platform, like Bukalapak and Tokopedia. Aside from that, gold has also been used as a guard during the country’s economic downturn. 

As the gold production in Indonesia is currency outpacing domestic gold demand, most production is shipped abroad. However, the Indonesian government is currently stimulating the establishment of national processing industries to increase profits by exporting products that have added value, while preventing the over-exploitation of the country’s natural resources.  

Aside from the Grasberg mine in Papua, there is also the Batu Hijau mine in Sumbawa, the Martabe mine in North Sumatra, and Pongkor in West Java, and Cibaliung in Banten. In which most of these mines are already occupied by international mining companies from across the world. 

International Mining Companies Who Had Successfully Penetrated the Indonesian Market

1. Freeport-McMoRan Copper & Gold Inc. 

An American-based mining company that is currently the largest taxpayer to the Indonesian government. They own the majority of the Grasberg mine in Papua, which approximately produces gold as much as (67.4 million ounces). By December 2020, the company was able to garner USD 14.2 billion in revenue, USD 42.14 billion in total assets, and USD 599 million in net income globally. 

2. Newmont Mining

Newmont is an American-based mining company that is listed in the S&P 500 index and is widely recognized for its principled environmental, social, and governance practices. They currently occupy the Batu Hijau mine located in Sumatera. By 2020, Newmont was able to achieve a revenue of USD 11.5 million, increasing significantly every year globally.

3. Sumitomo

Sumitomo Metal Mining is a Japanese mining company that is engaged in mining, non-ferrous metal smelting, reigning, and advanced material businesses. They currently occupy the Batu Hijau mine alongside Newmont mining. In 2018, they successfully made a smelter for nickel, with a value of IDR 74 Trillion.

Future Prospects of Indonesia’s Gold Industry

The global gold mining market is forecasted to grow from USD 214.1 billion in 2021 to USD 249.6 billion by 2026, at a compound annual growth rate of 3.1% for the period of 2021-2026. Aside from that, Jewelry as an end-use of the gold mining market should grow from USD 107.3 billion in 2021 to USD 124.6 billion by 2026, and a CAGR of 2.0% for the period of 2021-2026.

Gold trading is widespread in Indonesia, and there is no restriction or price control over buying and selling of gold. Online gold trading is gaining popularity among the younger generation of investors in Indonesia and it is gaining in popularity as an investment vehicle. 

Indonesia has a dynamic but overlooked Asian gold market, since it is overshadowed by neighboring countries like Singapore, India, China, Thailand, and Vietnam. However, Indonesia’s gold market varies from refining and exchange-based financial intermediation to downstream retail distribution and gold exports. With that, it represents a truly active domestic gold market and a suitable export source. Not to mention Indonesia has the third-largest population in Asia, with developing citizens, the Indonesian gold market is certainly worth watching in the future.

Enter Indonesia’s Gold Industry with BRIGHT Indonesia

Indonesia certainly has a large number of internet users which could contribute to the overall performance of the e-commerce industry. So, if you are an International brand trying to enter the Indonesian market, you need the right local partner to assist you. 

BRIGHT Indonesia is an ideal business partner for you. We will assist you on the ground, including virtual assistants during the mission, logistical planning, and detailed communication. It can cause your company to focus on developing partnership cooperation rather than the hassles of the business trip.

BRIGHT Indonesia provides several services such as Market Insight Research, Business Partnership Engagement, Management and Strategy Consulting, and Foreign Direct Investment. The services will help your business to:

1. Assist you in expanding and developing your business by identification of potential partners.
2. Secure the agreement between client companies and future Indonesian business partners by providing a list of potentially suitable partners, arranging business meetings, and acting as a liaison.
3. Supporting our foreign client companies from the private sector with developing corporate or business unit strategies or helping your company from public sector organizations with public policy.
4. Link client companies both from the private and public sectors in global foreign direct investment (FDI) through training and assisting your company in entering FDI source countries to gather investment for your company’s local markets.

For more information, email info@brightindonesia.net.

*This article is written by Aurellea Dashaliva