Ministry to issue decree on added value

The Energy and Mineral Resources Ministry plans to issue a ministerial decree on minerals and coal processing by the end of this year as a regulatory platform to implement the ban on raw material exports starting in 2014.

The ministry’s director general for minerals and coal, Thamrin Sihite, told reporters that his office and businesspeople in the sector would conduct a series of focused group-discussions to discuss the draft decree prepared by the ministry.

“This month we’ll conduct the discussions with businesspeople and [mining and coal] associations. After that we’ll hold a wider discussion before the final draft is submitted to the Energy and Mineral Resources Minister,” he said Tuesday.

The discussions would decide, among others, whether the decree for minerals and coal would be separated or not, Thamrin said.

“There are some people who argue that they [minerals and coal] are two different sectors and must be regulated differently,” he said.

The 2009 Mineral and Coal Law stipulates that starting 2014 there will be no more raw material exports, all miners have to process their raw materials in the country to develop the downstream mining industry.

According to the draft decree prepared by the ministry, coal miners can only export coal with a calorific value of, or higher than, 5,700 kilocalories per kilogram. However, Thamrin said that the limit would still be discussed with miners.

For minerals, only products that have been 99 percent processed can be exported. Thus, for instance, nickel miners can no longer export nickel ore, it will have to be processed into nickel matte to be
sent abroad.

Many mining companies support the regulations stated in the draft, but most coal miners still disagree on the calorie limit for export. They argue that the technology to upgrade the calorific value of coal economically is not yet available in the country.

Earlier, the Indonesian Coal Mining Association said that two coal upgrading facilities would be set up in South Kalimantan and South Sumatra. After years of research and experiment, the first coal refinery could be built in 2012 in Tanah Bumbu, South Kalimantan, inside PT Arutmin’s mining area.

The association’s assistant executive director, Anim Lukman, revealed that the cost of refining 1 million tons of coal was US$150 million, adding that the research and development was a joint project between the Indonesian and Japanese governments and started in 2001.

The upgraded brown coal process can increase the calorific value from 4,500 to 6,100 kilocalories
per kilogram.

Many experts have urged the government to provide appealing incentive schemes for investors to construct processing plants in the country.

The deputy for energy, mineral resources and forestry at the Office of the Coordinating Economic Minister, Wimpy S. Tjetjep, revealed that the country needs around Rp 830 trillion ($92.68 billion) in investment until 2014 in order to fuel the growth of the mining sector.