Indonesian miners have urged the government to review the banning of metal ore exports as of May as many companies claim that they could face bankruptcy due to not being able to meet their commitments to overseas buyers.
The executive director of the Indonesian Mining Association, Syahrir Abubakar, said the issuance of the 2012 ministerial regulation on raw material exports would ultimately be good for the country. However, he doubted the regulation could be implemented effectively in May.
“It’s true that the export ban has been included in the 2009 Minerals and Coal Law. However, as of early 2012, the government did nothing to encourage companies to process and refine metal ore in the country,” he said.
“If the government now suddenly forces all companies to stop exporting ores, how can they fulfill their export commitments? If they can’t export, how about the financing of their operations?” he questioned.
Financial institutions might withdraw their funds from miners that fail to fulfill their export commitments, Syahrir argued. If that happened, many companies would be forced to shut down, he added.
“The impacts for the government are revenues from royalty payments will drop, the image of Indonesia will be ruined due to failure to honor export commitments and investors will lose trust in Indonesia’s investment climate,” he emphasized.
The Indonesian Mining Association has estimated that due to the implementation of the ministerial regulation, Indonesia’s bauxite and nickel ore shipments to China might plunge 75 percent this year, as reported by Bloomberg.
The government and miners have different interpretations of the ministerial regulation. The Energy and Mineral Resources Ministry claims it will not directly stop raw material exports in May. The deadline is for companies to submit comprehensive plans to comply with the 2009 Minerals and Coal Law, which mandates the abolishment of metal ore exports by 2014 at the latest.
Syahrir said miners referred to Article 21 of the ministerial regulation, which says that all mining companies must stop exporting raw materials three months after issuance of the regulation. The regulation was issued on Feb. 6.
However, the Energy and Mineral Resources Ministry’s director general for minerals and coal, Thamrin Sihite, revealed that Article 24 of the regulation says mining companies must submit their plans to process and refine their raw materials in the country, whether they want to build their own smelters or use those of other companies.
The article also says companies must periodically report the progress of their efforts in complying with the smelting obligation.
“Article 21 can’t be seen alone. It has to be interpreted together with Article 24, which provides room for adjustment. We’ll not directly ban metal ore exports in May should the companies submit their plans. But if they don’t, we’ll revoke their export licenses,” Thamrin explained.
The ministry aims to ramp up revenue from the general mining sector to Rp 108.22 trillion ( US$11.76 billion ) in 2012 from Rp 77.38 trillion last year.
The Rp 108.22 trillion target comprises Rp 81 trillion in tax revenue and Rp 27.22 trillion in non-tax revenue. In 2011, tax revenue hit Rp 55 trillion, while non-tax revenue touched Rp 22.38 trillion. The realization may be lower than the target if raw material exports are banned.
—JP/ Rangga D. Fadillah