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Export Ban Is Making Miners Dig Deep: Govt
Faisal Maliki Baskoro | September 23, 2011

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DrDez
9:53am Sep 28, 2011

another well thought through legislation designed at creating yet another level of abuse

Its a good thing to export processed materials BUT it should be done on viability not protectionist laws and above all it takes a long time.

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The nation’s mineral resource processing capacity will more than triple by 2016, according to the Energy Ministry, with the boost fueled by a law banning the export of raw minerals that comes into effect in three years.

But a leading industry body is yet to be convinced, saying the 2014 start date for the new law is too soon for the massive investment required.

Ministry official Tatang Sabaruddin said on Friday that several companies have outlined plans to invest in mineral processing, which would boost the industry’s capacity to 33 million tons by 2016 from the current 10 million tons.

The ministry is in the process of designing a roadmap to develop the country’s mineral processing industry, he said.

Under an Indonesian law to be in place starting in 2014, raw materials will need to be processed before they can be exported. The law is designed to boost the downstream mineral processing industry, preventing the nation from merely being a quarry for other economies.

Tatang said the change meant that Indonesia would effectively no longer export raw minerals. Companies that are still engaged in exporting raw minerals will be punished, he added.

Tatang said that at present the only mineral processing facilities were operated by Smelting Gresik for copper and Aneka Tambang (Antam) and INCO for nickel, while other minerals such as bauxite, iron ore, iron sand and manganese are exported as raw materials.

According to the ministry, Global Investindo, Nusantara Smelting and Indosmelt are committed to invest in copper processing, and Antam and Weda Bay Nickel say they will invest in the nickel sector. Meanwhile, Harita Prima Abadi Mineral and Antam are expected to invest in the bauxite sector, Krakatau Steel and SILO are planning to invest in the iron ore sector and Sumber Bumi Kalbar will invest in the manganese sector.

But not everyone is convinced the law can be effectively enforced. Bambang Sujagad, an official with the Indonesian Chamber of Commerce and Industry (Kadin), cast doubt on the government’s goal of curbing the export of raw minerals, citing a shortage of energy, lack of preparation and poor coordination among departments as key reasons.

“A mineral processing industry requires a lot of power, which is mainly supplied by the state utility company Perusahaan Listrik Negara,” he said. “We can’t wait for PLN to build a power plant. Instead private companies should be given leeway to build their own power plants.”

He said there wasn’t enough time before the law came into effect for the development of technology and the establishment of smelters and factories.

“Research, adopting technology, implementing it and then setting up a factory could take more than three years,” Bambang said. He added that coordination between the central and local governments would be problematic.

“We’re talking about coordination between the Energy and Mineral Resources Ministry and the Industry Ministry, and between them and the local governments. It would need a concentrated effort to make this work,” he said.

Many of the resource projects involve joint ventures between Indonesian and foreign companies. Among them is the $4.6 billion smelter servicing the Weda Bay Nickel site in Maluku, which is jointly operated by a unit of French mining group Eramet, Japan’s Mitsubishi Corporation and Indonesia’s Antam.