Companies reluctant to enter downstream industries

Mining companies have shown a low level of enthusiasm to enter downstream industries, as required by the 2009 Minerals and Coal Law, due to lack of incentives and unclear government policies, says the Association of Indonesian Mining Professionals.

Without attractive incentives, he was pessimistic that the companies would seriously comply with the law given that the punishment for infringement was only administrative, mining association chairman Irwandy Arif told The Jakarta Post.

“Only a company or two have seriously prepared to enter the downstream industries,” he said on the sidelines of the 4th Added Value Mining Indonesia Conference, Workshop and Exhibition at Ritz-Carlton Hotel in Jakarta on Thursday.

He added that several companies had developed research or pilot projects to produce derivative products of their commodities, but claimed that none were ready to produce the products on an industrial scale.

Irwandy urged the government to create clearer guidelines and policies for companies to develop the downstream industries.

He said that a working group from his association was currently assisting the Energy and Mineral Resources Ministry in deliberating a new ministerial decree on detail rules and strategies to develop downstream mining industries.

“The draft will contain explanations on mechanisms on how mining companies should process their products,” he said. He took the example of the nickel commodity that he proposed had to be processed minimally into ferro or matte nickel.

The minerals and coal law stipulates that all mining companies are obliged to process their mining products in the country by no later than 2014. The law aims to promote the development of industries producing mining derivative products. (rdf)