[Indonesia] Smelting industry held hostage by policy uncertainty – by Viriya P. Singgih (Jakarta Post – December 20, 2016)


A plan to allow more exports of raw and partly processed mineral products has irked businesses that have already invested heavily in smelters intended to add value to mineral ores and generate a multiplier effect for the economy.

The businesses argue that such a policy would not only send a chilling message to the international community that Indonesia cannot hold to its commitments, but also harm the downstream industry and put more pressure on the global prices of several mining commodities already experiencing a supply glut.

A draft regulation prepared by the Energy and Mineral Resources Ministry, a copy of which was recently obtained by The Jakarta Post, will allow companies with mining licenses (IUP), or special mining licenses (IUPK), or former holders of contracts of work to have the privilege of getting five-year export licenses.

Partly processed or raw nickel, bauxite, anode slime and copper telluride will be on the list of products allowed for overseas shipment. Companies will also be allowed to resume the export of copper concentrate.

The only requirements from the government are for the companies to pay an export tax and construct a smelter.

“Don’t play around with such a high-risk policy. There have been many smelters developed recently and once we open the exports gate the outflow will be unbearable,” Indonesian Smelter and Mineral Processing Association (ISPA) chairman R. Sukhyar told the Post on Monday.

“The domestic industry will be left in turmoil as miners will prefer to export the mineral ores.”

Foreign investors, mostly from China and Russia, have flocked into Indonesia after a 2009 Mining Law requires a total ban on raw and partially processed mineral exports, encouraging many to set up processing plants to take advantage of the law.

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