Editorial: Shockwaves from Indonesia’s unprocessed minerals export ban – by John Cumming (Northern Miner – January 22, 2014)

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry. Editor John Cumming MSc (Geol) is one of the country’s most well respected mining journalists.  [email protected]

The crisis for miners in Indonesia that quietly built up over late December has exploded in the new year, as miners active there grapple with sweeping new restrictions on exports of raw concentrates from the country.

Indonesia’s unprocessed minerals export ban was proposed in 2009, but only came into force on Jan. 12. Importantly, not all commodities are treated equally and, thanks to some last-minute manoeuvering, the ban is not structured in the way it was first proposed.

On the part of miners, the broad attitude of denial — that the Indonesian government was playing chicken with concentrate exporters — is now giving way to more sober assessments of how to work under the new rules.

There are already mineral concentrates that have been exempted from the export ban and can still be exported: copper, lead, zinc, iron ore, iron sands and manganese.

But — and it’s a big but — the exports of the above concentrates will be subject to a 25% sales tax that will rise every six months until it reaches 60% in 2017, at which time all exports of unprocessed minerals will be banned.

While there is some copper-smelting capacity in Indonesia, higher-level processing capacity is minimal for the other exempted concentrates, leading to the conclusion that mining the exempted metals economically is impossible in the near-term.

For juniors such as Kalimantan Gold, the world has been turned upside down. Its deep-pocketed partner at its technically impressive KSK copper project in Central Kalimantan, Freeport-McMoRan Copper & Gold, started the new year by walking away from the project after having spent $33 million since the joint venture was formed in April 2011. Kalimantan Gold will regain 100% ownership of the project, including all the data generated by Freeport’s work, which is highlighted by 30,000 metres of drilling.

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