T

he government has given mineral producers three months to submit a comprehensive plan to face the implementation of the ban on metal ore exports starting in 2014 or risk having their export permits revoked.

Energy and Mineral Resources Minister Jero Wacik said the government would set up a team to review the proposals submitted by the companies. If the proposals were deemed “unreasonable” or “half-hearted”, the government would impose the export permit revocation.

“This is one of our strategies to ensure the mandates of the 2009 law on minerals and coal is upheld. Mining companies should have good faith in preparing the way for the raw-materials export ban,” he announced at a press conference at his office on Monday.

The ban on metal-ore exports was initially to be implemented three months after the ministry issued the regulation on Feb. 6. However, with the limited amount of smelting facilities in the country, the government acknowledged that the plan was not realistic and decided to grant a grace period for mineral producers to formulate contingency plans, which could include establishing smelter companies.

Coal and minerals director general Thamrin Sihite said the aim of the export ban was not to oblige all mining companies to individually establish smelters. If the production was too small for a smelter’s economic scale, the company could set up a consortium with several other companies to build a smelter together.

“Several investors have also expressed interest in building smelters in the country, however, they have requested a guarantee that they will access sufficient supply of raw materials,” he said.

Thamrin said the export ban was necessary given the fact that over the past several years Indonesia’s metal ore exports had increased rapidly.

“The pace of the export increase is rather scary,” he said after the press conference.

The ministry’s data shows that in 2011 Indonesia’s bauxite exports reached nearly 40 million tons, jumping from 27 million tons in 2010, 16 million tons in 2009 and 13.5 million tons in 2008.

For iron ore, exports hit 13 million tons in 2011, up significantly from 8 million tons in 2010, 7 million tons in 2009 and 2 million tons in 2008.

The same trend is also seen in nickel. Nickel exports were 33 million tons last year, rising steeply from only 17 million tons in a year earlier. The export level was 11 million tons in 2009 and 4 million tons in 2008.

Indonesian Mining Association (IMA) executive director Syarir AB said the association would fully back the government’s strategy. He argued that companies should have already been ready with comprehensive proposals a long time ago.

“The time limit isn’t three months. Mineral mining companies should have had plans in 2009 when the Mineral and Coal Law was first enacted,” he told The Jakarta Post over the phone.

“If they are not ready and the government revokes their export permits, it is their own fault,” he said.