Weak Mining Sector: Production of Heavy Equipment in Indonesia Fell 30%
In 2013, domestic production of heavy equipment in Indonesia fell 30 percent to 6,127 units from the previous year as commodity prices (such as crude palm oil and coal) were still down. This made Indonesian miners reluctant to ramp up production figures, thus having less need to purchase heavy equipment. According to Pratjojo Dewo, Chairman of the Indonesian Heavy Equipment Association (Hinabi), demand for heavy equipment in Indonesia started falling at the end of 2012 and continued into 2013.
This year, demand for heavy equipment in the mining sector of Indonesia will remain weak. Therefore, Dewo hopes that the construction and plantation sectors will replace mining as the main source of heavy equipment demand (particularly government-initiated infrastructure projects are hoped to boost this domestic demand). Regarding 2014, Dewo expects production of heavy equipment to grow approximately six percent to 6,500 units. The growth rate of heavy equipment with a capacity of 10 to 30 tons (used in the construction sector) will increase but heavy equipment with a capacity of 40 tons or more (used in mining) is expected to fall.
The three most produced types of heavy equipment in Indonesia are excavators, bulldozers and mining dump trucks. However, production rates of all three types fell in 2013. Mining dump trucks fell most significantly, from 133 produced units in 2012 to 21 in 2013.
The rupiah exchange rate is also an important factor in the heavy equipment industry as part of components are imported in US dollars. Indonesia's rupiah fell over 21 percent in 2013, thus making these imports much more expensive.
Important players in Indonesia's heavy equipment industry are United Tractors and Intraco Penta.