Jakarta. The mining sector is pivotal to the economy. It contributes Rp 2,300 trillion to the economy, which is equivalent to 8.57 percent of Indonesia’s total gross domestic product (GDP). The government reported that non-tax revenues from minerals and coal were the highest, surpassing those contributed by the oil and gas as well as the renewables sectors.  The target stands at Rp 113 trillion for 2024, but it has now reached Rp 61 trillion.

The mining sector has also attracted more investments, particularly from domestic investors who eye the export-oriented downstream sector. According to President Joko “Jokowi” Widodo, the establishment of mineral smelters in the country has opened up over 200,000 jobs and boosted state revenues by Rp 158 trillion.

Merdeka Copper’s Role

Merdeka Copper Gold is among the mining giants in Indonesia. Established in 2012, Merdeka became a public company with MDKA as its ticker symbol. Its leading shareholders include Saratoga Investama Sedaya Tbk, Provident Capital Indonesia (through Mitra Daya Mustika and Suwarna Arta Mandiri), and Garibaldi Thohir. Merdeka manages world-class assets and has vowed to uphold high-standard environmental, social, and corporate governance (ESG) principles. The company has even recorded an ESG rating of A, according to the Morgan Stanley Capital International (MSCI) assessment in 2023. The company also vows to provide a positive impact to not just the economy, but also the environment, employees, and the communities around its operational area.

"Merdeka believes that business sustainability is determined by how we manage our operations efficiently, protect the planet, empower employees, engage the community, and adopt the highest standards of good governance. In line with the company's beliefs, our stakeholders are increasingly highlighting our performance in managing ESG in every aspect of our operations,” Merdeka Copper Gold’s head of corporate communications Tom Malik said. 

Merdeka employs around 10,970 people. The number of employees are also rising as the company grows its business and acquires a number of assets. Its subsidiary PT Bumi Suksesindo (BSI) contributed Rp 1.5 trillion in tax payments to Banyuwangi during 2016-2023.

Merdeka's sustainability policy includes various commitments, including environmental maintenance, occupational health and safety, compliance with labor standards, respect for human rights, community involvement and development, responsible supply chains, and the implementation of good corporate governance. The Community Development and Empowerment Program (PPM) is a pivotal aspect of Merdeka’s sustainability strategy.

According to its 2023 Sustainability Report, PPM Merdeka program financing cost $3,075,498. The money went to the fields of education, health, employment, economic independence, social and culture, environment, community capacity building and infrastructure development. As a case in point, PT BSI, which manages Banyuwangi’s Tujuh Bukit gold mines, provided scholarships. The company has granted 121 scholarships to the locals for associate degrees, undergraduate degrees, and Islamic boarding schools. The company has also carried out some environmental initiatives, including planting mangroves.

Company Prospects

A number of analysts are upbeat about MDKA’s business prospects for this year as the company works on a series of projects that span from the upstream to the downstream mining sector. In the first quarter of 2024, MDKA’s revenue stood at $541.05 million. This marks a 152.57 percent year-on-year increase compared to $214.21 million in the same period the previous year.

The Tujuh Bukit copper project is an underground mine in Banyuwangi. It is one of the largest undeveloped copper deposits in the world. Merdeka is currently working on the Pani Gold project in Gorontalo, Sulawesi. It is set to be one of Indonesia’s largest primary gold mines.

Through its subsidiary, PT BSI, the company will operate a world-class underground copper mining project. This project will later become the third-largest copper mine in Indonesia. This underground copper mining project has been developed since 2018 with an investment cost surpassing $200 million. The Tujuh Bukit Copper Project is set to be operational in the next 2-3 years and will become a major contributor to MDKA’s income.

The company has also set up Merdeka Battery Materials (MBMA), which operates nickel mines and smelters. MBMA aims to be one of the key suppliers of raw materials for global electric vehicle production. Merdeka is also currently developing the AIM (acid, iron, metal) project at Indonesia Morowali Industrial Park (IMIP). The plant will process spent ore from Wetar Copper Mine to produce sulfuric acid needed for the nickel downstream process and other metals such as copper, gold, silver, and iron.

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