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Raw mineral exports from different perspective
There are more issues aside from Freeport in the country’s mining sector that need to be raised and discussed.
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An employee walks past bags of material belonging to mining company PT Vale Indonesia in Sorowako, South Sulawesi. (JP/Ruslan Sangaji)
M
edia reports surrounding the country’s mining industry has been recently dominated by Freeport, Freeport and Freeport. However there are more issues in the country’s mining sector that need to be raised and discussed.
The Freeport saga is a result of Government Regulation (PP) No. 1/2017, which eventually gives Freeport a choice of converting its contract of work (CoW) with a requirement to build a smelter, or continuing with the CoW until 2021 with the possibility of not being granted an extension.
Issued as the fourth revision of PP No. 23/2010, PP. No. 1/2017 was also accompanied by Energy and Mineral Resources Minister’s Regulation (Permen ESDM) No. 5 and 6/2017, which gives details about what was being revised in PP No. 23/2010.
Two of the most discussed issues are nickel ore with a grade of less than 1.7 percent that can now be exported, as well as washed bauxite with Al203 content greater than or equal to 42 percent as stipulated in article 10 of Permen ESDM No. 5/2017.
Resistance to the resumption of nickel and bauxite ore exports is unavoidable. Lately, a non-profit organization filed the material test for those regulations with the Supreme Court, with the hope that those regulations would be nullified because they contravene the previous Law No. 4/2009.
Working for years in bauxite processing, I would see reversing the mineral export ban from a different perspective.
There are two fundamental concepts that need to be examined when discussing non-renewable natural resources. First is the “present value” from a very influential article: “The Economics of Exhaustible Resources” by Harold Hotelling, which is re-discussed by John E. Tilton in his book that serves as a bible for mineral economists: On Borrowed Time. It is said there that the mine’s goal is to maximize the present value of its current and future profits.
