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fter long debates and time-consuming negotiations with miners, Energy and Mineral Resources Minister Jero Wacik has signed a ministerial regulation affirming the ban on metal ore exports starting 2014.

The regulation stipulates that all raw metals — including gold, copper, nickel, bauxite and iron — have to be processed in the country as mandated by the 2009 Minerals and Coal Law.

The export ban aims to boost the capacity of the country’s metal production, utilize the processed products for domestic purposes, use the by-products of the processed metals for chemical and fertilizer industries’ raw materials and increase the country’s revenue.

Deputy Energy and Mineral Resources Minister Widjajono Partowidagdo said the regulation did not oblige every mining company to build a smelter. Mining companies can process raw materials in any smelter in the country, he added.

“The most important thing is that the smelters are located in Indonesia. Many investors have expressed interest in building smelters here, so a mining company can choose whether it wants to build its own smelter or not,” he told reporters at his office in Jakarta on Friday.

Considering expensive investments required to construct a smelter, the government was currently considering the possibility of providing incentives for investors, Widjajono revealed.

As a comparison, state mining firm PT Aneka Tambang (Antam) needs around US$1.6 billion to build a ferronickel processing plant in East Halmahera, North Maluku, with an annual production capacity of 27,000 tons.

The ministerial regulation says for mining permit holders that cannot comply with the regulation, or do not process their own raw materials in the country, punishments will include: written warning, temporary termination of their activities and the revocation of permits.

To effectively implement the export ban, Indonesian Mining Association (IMA) deputy chairman Tony Wenas argued that companies not engaged in mining should build smelters.

“This regulation should not burden miners. Because the sanctions are very harsh, the government has to work hard to invite investors to build smelters and it is necessary to provide incentives,” he said.

The chairman of the Indonesian Mining Experts Association (Perhapi), Irwandy Arif, agreed with the government’s move in issuing the regulation, however he warned that it would be difficult to fully implement it in 2014.

“As of today, there are not any smelters being built in the country. Several companies have indeed planned to build processing plants, but none will be ready in 2014,” he said.

He said that to build a smelter, a company needed to spend between seven and eight years from proposing the idea to the government to commercial operation. But, since the regulation had been issued, the government and miners had to cooperate to implement the regulation on schedule.

“With only two years left, we have to take all necessary measures to ensure that in 2014 we’ll be ready.”

As of today, only Antam has committed to building smelters. In addition to the one in East Halmahera, the firm also plans to build three other processing plants in Tayan in West Kalimantan, Mewapah in East Kalimantan and Mandiodo in Southeast Sulawesi.