With at least seven firms starting construction of mineral smelting plants in Indonesia this year, the Energy and Mineral Resources Ministry is pressing on with its plan to completely ban the export of unprocessed minerals in 2014 as stipulated in the 2009 Mining Law, despite a challenge by business players.
The ministry’s director general for minerals and coals Thamrin Sihite said on Monday the firms included the Bintang Delapan Group, which was currently constructing its nickel smelting facility in Central Sulawesi and state-owned mining company PT Aneka Tambang (Antam), which had begun work on its smelter-grade alumina (SGA) plant in Mempawah, West Kalimantan.
Bintang has reportedly teamed up with China’s Dingxin Group in an investment worth up to US$1 billion to build the plant, which will process nickel ore into ferronickel with a capacity of 30,000 tons per year.
Antam’s $1 billion plant, in which the firm has partnered with Hangzhou Jinjiang of China, is projected to begin production in the first quarter of 2016 with an annual capacity of 1.2 million tons of alumina.
Other firms include PT Meratus Jaya Iron and Steel, a joint venture between publicly listed PT Krakatau Steel and Antam, whose Rp 1.17 trillion plant located in Batulicin, South Kalimantan, is expected to begin production in 2013. It will process iron ore into sponge iron for steel production with a capacity of 315,000 tons per year.
According to Thamrin, the government was “upbeat” about its plan to ban raw-metal ore shipments from 2014 as stipulated in the mining law. “In addition to those firms, there are currently 154 proposals from various firms expressing interest. So I think we are on track with the plans,” he told reporters at his office in Jakarta.
Indonesia is currently in the process of boosting the value of its mineral exports by expanding the downstream sector in accordance with the 2009 law.
Under the law mining firms are obliged to set up their own smelters, cooperate with independent smelting firms to process their mineral ore or sell their mineral ore to local smelting plants.
In a bid to prevent the exploitation of raw-ore mineral exports ahead of 2014, the government issued Energy and Mineral Resources Ministerial Decree No. 7 on mineral processing on May 6 this year.
In November, copies of a verdict allegedly from the Supreme Court on Sept. 12 annulling the export restrictions were circulated by the country’s nickel association, which had filed a lawsuit against the decree.
Thamrin, however, said that until his office received the original verdict from the court — whose spokesman, Ridwan Mansyur, previously told The Jakarta Post that the document was still being processed — the decree was still in effect.
Separately, Industry Minister MS Hidayat told reporters in Jakarta on Monday that in addition to the firms mentioned, several companies from China, Japan, Russia and South Korea already had plans “in the pipeline” for constructing local refineries or smelting plants for minerals such as bauxite, nickel and copper.
Indonesian Mining Association (IMA) executive director Syahrir Abubakar said the association appreciated the government’s efforts to realize its policy.