Indonesia curbing nickel supply to support locals, Eramet says
The French miner was this year given a sales quota by the Asian nation that was 29% less than it expected.
Despite Indonesia being blessed with an abundance of natural resources, there has been limited foreign investment into greenfield projects within the nation.
So plentiful are Indonesia’s resources, global mining companies regularly rank Indonesia highly in terms of coal and mineral prospectivity but as PriceWaterhouseCoopers note, “Clearly there is still much room for improvement in the Indonesian mining regulatory environment, if Indonesia is to realise the full potential of its mineral resources.
But one of the major roadblocks to greenfield projects in Indonesia, is accessibility.
Fundamental to mining regulation in Indonesia is environmental conservation, which is why accessibility to greenfield projects can be a financial nightmare for exploration companies through uncharted terrain, prone to severe weather conditions.
Despite this, Indonesia is a major production hub for copper, nickel and gold, a leading exporter natural gas and the world’s second largest producing nation of tin, via readily accessible resources.
Whilst the cost of building roads in remote Indonesia is financially and environmentally costly, Australian company SAPEX Group have solved this problem. SAPEX Group are distributing, under license, a commercial matting system, that mining and resource companies can drive thousands of tonnes of machinery across, designed to withstand the most arid and challenging conditions.
These mats, engineered by Newpark Resources and originally designed by the U.S. Military, are a substitute to building roads and solves crucial accessibility issue. This is highlighted by the fact its current clients include major operations such as: Chevron, Exxon-Mobil, Halliburton and Newcrest Mining amongst others.
Leased out at $5-8 per day, distribution of the matting system has become highly profitable and a key driving force behind SAPEX Group’s expansion and planned acquisition of SAS as a natural growth progression.
On completion of the current SAS acquisition, SAPEX will have consolidated the entire DURA-BASE mat inventory within Indonesia, in addition to holding the exclusive DURA-BASE distribution license as part of their transition from an agency business model towards an owner and operator model.
PT SAS has acted as the Indonesian agent for the DURA-BASE matting business since 2002 and has generated in excess of AU$20 million in revenue from the mats since 2015.
On 24th September, it was announced that SAPEX Group has determined that an ASX listing is to be pursued, with a target completion date of late Q4 2018.
This presents a unique opportunity for investors to capitalise on a Company that facilitates access to mineral-rich greenfield regions via the distribution of these revenue-generating mats.
Investors can register their interest in SAPEX Group’s planned ASX listing here to receive further information when it becomes available.
Written by: David Sellars, Senior Investment Advisor, OzFinancial Australia
