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Jakarta Post

RI to ride out the storm with 2014 raw ores ban

  • Amahl S. Azwar

    The Jakarta Post

Jakarta   /   Mon, July 22, 2013   /  09:36 am

Indonesia will have to weather a storm as its full ban on exports of unprocessed mineral ores, which is slated to begin in 2014, approaches, with at least 11 smelters expected to start operations at the time, a top official has said.

 The Energy and Mineral Resources Ministry'€™s minerals and coal director general Thamrin Sihite said recently that with the current number of smelters in the pipeline, his office would not back down from the plan despite opposition from several large miners.

 '€œWe are looking forward to the plants beginning construction as we have already evaluated the projects,'€ he said. '€œThe 2014 raw mineral ores ban is specified by law and therefore it is imperative that we implement it.'€

 According to the 2009 Mining Law, miners will have to process their mineral ore at their own smelters or at independent smelters beginning January 2014, before exporting their mineral production.

 Miners that do not have a smelter or are reluctant to process their raw minerals at other smelters will be banned from selling their unprocessed ores overseas.

 Several regulations were drafted last year to avoid over-exploitation of raw minerals toward the start of 2014, restricting exports of raw mineral ores by demanding mining firms to acquire a clean and clear status to obtain export permits as well as paying a 20 percent export tax.

 The regulation applies to the export of 65 mineral commodities.

 Out of 285 proposals submitted to his office, Thamrin said that only 23 documents went through the evaluation process. Most of them would begin operations in mid-2014 while the rest of the plants might start processing in early 2015.

 Mining giants in the country such as American firms Freeport and Newmont have expressed their opposition to the plan, citing the fact that building smelting plants in the country '€œwere not economically feasible'€.

 Freeport Indonesia technical affairs director even earlier said Freeport would have to lay off hundreds of its workers at its mines in Papua should the government go ahead with the ban.

 Vancouver-based mining think tank Fraser Institute ranked Indonesia 96th out of 96 countries in its 2012 survey, due to the government'€™s plan to enforce the export ban, listing Southeast Asia'€™s biggest economy as the worst destination for miners to expand their business.

However, the ministry'€™s mineral director, Dede Indra Suhendra, repeatedly said Indonesia could not cancel the 2014 plan just because of objections from industry players.

 '€œIt will be unfair to cancel the plan now to those companies that have planned to or even began construction of smelting plants,'€ said Dede.

 A source within the industry, choosing to remain anonymous said the government should flex its muscles by implementing the 2014 plan, in order to show investors that it was consistent with the law.

 '€œIf the government wants to make adjustments about six months after the policy is implemented because of differing situations in the industry then so be it. However, the government must not relent now,'€ the source said.

 Earlier this year, Energy and Mineral Resources Minister Jero Wacik said the government would have to be realistic with the 2014 plan, and thus some of the mining giants would be exempted temporarily from the policy although he said the discussion was ongoing.

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