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Bauxite miners want price floor to lessen pain of export ban
While the government's export ban aims to spur smelter investments, industry representatives warn it could cause hundreds of layoffs in the bauxite sector.
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This picture taken in Kendawangan, West Kalimantan on February 13, 2017 shows a truck carrying material next to piles of bauxite materials at a bauxite mining belonging to Harita group in Kendawangan. (AFP/Adek Berry)
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fter the government enforced a ban on bauxite exports on Saturday, mining firms are calling for a remedy from the government to alleviate the ban’s impact, warning that output cuts could see hundreds of miners losing their jobs.
Producers say imposing a price floor to control how much smelters must pay for bauxite, as well as a push for local banks to provide more funding for smelter development, could lessen their pain.
For months, industry players have been pointing to a mismatch between national bauxite output and existing smelters’ input capacity, and that at current production levels, banning exports would result in around 17 million tonnes of unprocessed bauxite.
The government acknowledges the issue, with Irwandy Arif, special advisor to the energy and mineral resources minister, saying that domestic bauxite production could reach 31 million tonnes this year against the existing smelter capacity of only 14 million tonnes.
This would not result in a stockpile of surplus bauxite, however, as miners could curb production. Furthermore, the existing smelters were not running at full capacity, he said.
"Those miners can still sell [more] bauxite when the operating smelters increase their capacity [utilization]," Irwandy said on Monday.
The ministerial aide expressed his hope that the eight companies currently building smelters would make “good progress” in narrowing the difference between bauxite miners’ output and smelters’ input.
