Sector
Mining
Indonesia, a country rich in natural resources, boasts a mining sector that is undeniably one of its leading sectors. With vast reserves of mineral and non-mineral mining resources, the country stands as a global powerhouse in the mining industry. As of 2022, Indonesia’s mining industry contributed Rp2.3 quadrillion to the national GDP, accounting for 12.22 percent.
View moreMining
Indonesia, a country rich in natural resources, boasts a mining sector that is undeniably one of its leading sectors. With vast reserves of mineral and non-mineral mining resources, the country stands as a global powerhouse in the mining industry. As of 2022, Indonesia’s mining industry contributed Rp2.3 quadrillion to the national GDP, accounting for 12.22 percent.
Mining flourishes across various regions of the country, each contributing to the nation’s economy. It is present in regions such as South Sumatra, Riau, Riau Islands, Bangka-Belitung, Central Kalimantan, East Kalimantan, South Kalimantan, and North Kalimantan. Additionally, mining is also prevalent in Southeast Sulawesi, Central Sulawesi, West Nusa Tenggara, North Maluku, Papua, and West Papua.
Indonesia’s wealth of mineral resources offers a wide variety of materials available for mining. From abundant reserves of gold, bauxite, tin, and copper concentrates to nickel ore, the country’s rich mineral resources signify significant potential for economic growth and development. In addition, Indonesia is also rich in coal mining, with its abundant coal reserves catering to the energy needs of both domestic and international markets.
The country's mining sector thrives on these resources. In 2023, mineral resources such as bauxite reached a production of 28 million tons, gold at 85 thousand kilograms, tin concentrate at 57 thousand metric tons, copper concentrate at 3 million metric tons, along with nickel ore at 98 million metric tons.3 Meanwhile, Indonesia’s coal production reached 775.2 million tons in 2023, almost double than ten years earlier when coal production stood at 421 million tons.
Additionally, Indonesia is home to oil and gas exploration and exploitation, although its output has been dwindling. Once an exporting country of oil and gas, Indonesia has transitioned into a net importer of these commodities since 2008 when consumption surpassed outputs, which stood at around 1 million barrels per day (bpd). In the first semester of 2023, Indonesia’s oil output stood at 615 bpd.
Subsequently, the government has worked hard to reverse the trend of falling oil output and has set a target to restore oil lifting to 1 million bpd in 2030, alongside a gas production target of 12 billion standard cubic feet per day (BSCFD). As of January 2023, Indonesia’s documented oil reserves were 2.41 billion barrels, and its natural gas reserves stood at 35.5 trillion cubic feet.
As for investments, Indonesia secured US$30.3 billion for the energy and mining sector in 2023, marking an 11 percent increase from the previous year. That same year, the oil and gas sector led the way,
achieving US$15.6 billion in investments, followed by mineral and coal at US$7.46 billion, electricity at US$5.8 billion, and renewable energy at US$1.5 billion.
Latest News
The government plans to shift energy import procurement from Pertamina to the Oil and Gas Testing Center, or Lemigas, a public service agency (BLU) under the Energy and Mineral Resources Ministry. The move could reshape control over the country's lucrative energy trade. The government argues that direct negotiations with supplier countries will speed up procurement, eliminate intermediaries and secure supplies, but will the new arrangement bring greater transparency and a shorter supply chain or merely add another industry player?
Coordinating Downstream and Energy Transition Minister Bahlil Lahadalia, who is concurrently the energy minister, has cited Presidential Regulation (Perpres) No. 107/2026 as the basis for the change. Lemigas is to procure crude oil, fuel and liquefied petroleum gas through government-to-government (G2G) or government-to-business (G2B) agreements, then sell the supplies to Pertamina.
Pertamina president director Simon Aloysius Mantiri backs the policy. Bahlil has clarified that private importers will not be required to use Lemigas. Pertamina's infrastructure remains essential for receiving, processing and distributing the imports. Purchasing decisions must therefore match refinery requirements, storage capacity and delivery schedules. Separating authority over contracts from responsibility for delivery makes coordination more important as negotiations become faster.
The same distinction between contractual changes and practical benefits applies to Bahlil's promise to eliminate "shell companies”. Intermediaries that provide financing, logistics or access to suppliers perform a different role from entities that merely add fees or conceal who benefits.
Removing a company from a contract does not eliminate its functions or the costs of replacing them. The real test is whether Lemigas can secure those services on better terms. Disclosing supplier identities, beneficial owners, selection criteria and third-party fees would make that assessment possible.
Financing illustrates why these underlying arrangements matter. Bahlil has said procurement will not draw on the state budget, without identifying an alternative source of funds. Yet these commitments leave payment obligations unexplained.
If Pertamina finances the purchases, it could bear risks from contracts negotiated elsewhere. If commercial partners provide financing, their charges and conditions must be included in procurement costs. Who pays suppliers, approves financing terms and absorbs losses will determine whether cheaper cargoes actually translate into cheaper deliveries.
The timing also deserves scrutiny.
Signed on April 30, Perpres No. 26/2026 enabled Lemigas to undertake imports. Officials initially justified the arrangement as a workaround for Pertamina's bond covenants, which complicated purchases of sanctioned Russian crude.
Its first cargo, around 770,000 barrels, arrived in late June at Lawe-Lawe, East Kalimantan, aboard a sanctioned tanker. Less than six months later, the government introduced Perpres No. 107/2026 making Lemigas the default channel for Pertamina's imports, a trade worth US$32.8 billion last year.
Yet the government has not explained whether the initial purchase delivered savings or reduced sanctions exposure, and the regulation's text was publicly unavailable when the change was announced. An exception is being expanded without a public account of whether it worked.
Will Lemigas remove a layer from the supply chain or become a new one? The center has a background in research and testing, and industry practitioner Hadi Ismoyo has questioned its trading experience.
It will need commercial partners, yet Bahlil has neither identified the companies selected to develop storage facilities nor explained how they were chosen. Perpres No. 26/2026's provision on pricing flexibility during urgent procurement makes contract scrutiny particularly important.
Removing existing traders offers little assurance of savings if replacements enter through equally opaque arrangements. The core problems remain transparency and accountability.
The government should publish the Perpres, identify partners and selection criteria, benchmark landed costs and open transactions to audit. Otherwise, the reform risks changing intermediaries while adding another contractual layer.
The government has made a case for stronger bargaining power but has yet to establish why centralizing procurement in Lemigas is the best way to exercise this.
The ministerial agency’s expanded role must justify itself through lower total costs, reliable deliveries and decisions that withstand public scrutiny. Until those benefits are demonstrated, the clearest change is who controls the contracts.
Greater state control can strengthen energy security, but only if the power to choose suppliers comes with a clear obligation to account for the results.
