Indonesia to see declining revenue from mineral

Amahl S. Azwar, The Jakarta Post, Jakarta | Business | Fri, August 16 2013, 12:20 PM

 The government is preparing to see a decline in revenue from the mineral sector as the ban on the exports of unprocessed mineral ore is expected to take effect next year, a top official has said.

The restrictions on raw ore exports is aimed at giving added value to the mining products as well as moderating mineral exploitation.

The Energy and Mineral Resources Ministry’s coal and minerals director general, Thamrin Sihite, said on Thursday the country needs to tame the overexploitation of minerals in a bid to protect its resources.

“It is very crucial for us to control the current production to ensure the sector will be sustainable,” he said.

According to the 2009 Mining Law, miners will have to process their mineral ore at their own smelters or at independent smelters as of 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 shipping their unprocessed ore overseas.

Several regulations were drafted last year to avoid overexploitation of raw minerals approaching 2014, restricting exports of raw mineral ore 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.

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 “were not economically feasible”.

Freeport earlier this year said it might have to lay off hundreds of its workers at its mines in Papua should the government go ahead with the ban.

This week, however, Freeport Indonesia announced it would supply copper concentrates to two local smelting plants, scheduled to begin production in 2017, in a bid to comply with restrictions on unprocessed ore exports.

Commenting on this, Thamrin said despite Freeport having “showed commitments” to distributing copper concentrates to local smelters, the government does not have any plans to provide them with “flexibility” in 2014.

“The so-called dispensation can only be given if the 2009 Mining Law is revised. Both the central government and the House of Representatives have the right to try revising the law but so far there is no plan yet from the government to do so,” he said.

Separately, the Indonesian Mining Association chairman, Martiono Hadianto, also the president director of PT Newmont Nusa Tenggara, said that big firms who showed commitments on the policy would nevertheless request for “dispensations” to the government.

“We will still ask for flexibility,” he said.


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