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Indonesia’s president to weigh into mineral export confusion (Reuters U.S. – December 11, 2013)

http://www.reuters.com/

JAKARTA – Dec 11 (Reuters) – Indonesia’s president will make the final decision in a furious debate over next month’s scheduled ban on the export of unprocessed metal ore, an issue that pits nationalist-minded lawmakers against officials desperate not to lose revenue.

From next month, mining companies must process their ore before shipping it overseas, in a measure that aims to boost the value of exports from Indonesia, the world’s top exporter of nickel ore, thermal coal and refined tin. But smelting capacity is nowhere near ready, which means much of Indonesia’s output of metal ore will grind to a halt unless the processing requirements are relaxed.

And the law is kicking in just as a yawning current account deficit, exacerbated by waning global demand for commodities, is undermining investor confidence, leading to a drop this year of nearly a quarter in the rupiah’s value against the dollar.

“The president will decide it,” Trade Minister Gita Wirjawan told reporters on Wednesday, noting that Yudhoyono would make an announcement after consultations with the chief economic minister, the energy and mineral resources minister, the trade minister, the industry minister and parliament.

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Miners eye Jakarta’s planned iron ore ban – by Barry Filzgerald (The Australian – December 10, 2013)

http://www.theaustralian.com.au/business

NO one is getting too excited just yet, but there is a chance that Indonesia of all places may be about to do Australia a big favour — more particularly, our tin, nickel and bauxite producers.

Like the rest of the mining sector, all three could do with a bit of early Christmas cheer. Apart from the broader fallout from the recent spying scandal and the ongoing tragedy of boatpeople, Indonesia has not exactly endeared itself to the local resources industry, with its regular shocks and horrors when it comes to security of tenure.

But if the Indonesians deliver on their big commodities threat of early 2014, much of that will be quickly forgiven. The big threat is to follow through on the government’s plans to proceed with a mineral ore export ban from January 12 — a drastic attempt to force through value-adding processing of minerals with all the attendant jobs and investment creation.

Until the recent backing of parliament, few if any observers thought the ban would see the light of day. But the fact the parliament followed through — presumably after intense lobbying by those interests opposed to the move — means mineral export market watchers are beginning to factor in the potential for the Indonesians to do what they say they are going to do.

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China nickel importers strike term deals with eye on Indonesia ore ban – by Polly Yam (Reuters U.S. – December 5, 2013)

http://www.reuters.com/

HONG KONG, Dec 5 (Reuters) – China’s refined nickel importers are negotiating 2014 term deals with suppliers that give them the flexibility of adjusting shipment volumes depending on how Indonesia’s proposed ban on ore exports turns out.

The Southeast Asian nation has said it will ban unprocessed ore exports from January 2014, but is rethinking it in order to keep export revenues flowing in. On Thursday lawmakers rejected a government bid to water down the planned ban.

A ban on ore exports from next month will boost China’s demand for refined metal by hurting output of cheaper substitute nickel-pig-iron. Higher imports of spot refined nickel by the world’s biggest user of the metal could support global prices that have fallen nearly 20 percent this year.

Some 60 percent of nickel consumption in China is covered by nickel-pig-iron, a low-grade ferro-nickel used for stainless steel production. So widespread is its use now that China has become the world’s biggest and dominant producer of nickel-pig-iron.

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Coal rush ravages Indonesian Borneo (Malaysian Insider – December 5, 2013)

http://www.themalaysianinsider.com/

Barges loaded with mountains of coal glide down the polluted Mahakam River on Indonesian Borneo every few minutes. Viewed from above, they form a dotted black line as far as the eye can see, destined for power stations in China and India.

A coal rush that has drawn international miners to East Kalimantan province has ravaged the capital, Samarinda, which risks being swallowed up by mining if the exploitation of its deposits expands any further.

Mines occupy more than 70% of Samarinda, government data show, forcing entire villages and schools to move away from toxic mudslides and contaminated water sources. The destruction of forest around the city to make way for mines has also removed a natural buffer against floods, leading to frequent waist-high deluges during the six-month rainy season.

And despite the 200 million tonnes of coal dug and shipped out of East Kalimantan each year, its capital is crippled by frequent hours-long blackouts as the city’s ageing power plant suffers constant problems.

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Vale Hopes to Sign Contract Soon – by Francezka Nangoy (Jakarta Globe – November 27, 2013)

http://www.thejakartaglobe.com/

Vale Indonesia, the largest nickel matte producer in the country, remains optimistic it will conclude its mining contract renegotiation with the government sooner rather than later, ahead of heated national elections next year.

Nico Kanter, president director of the company, told reporters on Tuesday that in the past two months “there has been good progress” in talks with the government.

Mining companies are required to renegotiate mining contracts as the government aims for more benefit from the mining sector as well as creating downstream industries.

“We maintain our belief that we can be the first multinational company to conclude this renegotiation,” Kanter said. “There is an opportunity to finish before the April election.” Vale Indonesia is 59 percent owned by Vale Canada, a unit of Brazil’s Vale.

Indonesia is set to hold legislative and presidential elections in April and July respectively. Kanter said that if a new contract could not be concluded before the election, there was possibility that it may be stretched into 2015.

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Opinion: Finding ways to cure the Indonesia natural resource curse – Edi Suhardi (Malaysian Insider – November 23, 2013)

http://www.themalaysianinsider.com/

Indonesia’s vast natural resource wealth has been the backbone of its economic growth for years. It started with the oil bonanza in 1970-1980s, followed by timber and forest extraction in the 1980-1990s, mining spree in the 2000s and palm oil windfall in the last 10 years.

Such diversity of valuable resources if managed under prudent governance would indeed be a viable driver to propel the country to prosperity. However, as in any third world country, Indonesia is also plagued with the “resource curse” or the paradox of plenty that the resource-rich countries have less economic growth compared with countries which have less natural resources.

The country has failed to capitalise on the abundance of resource wealth to spur sustained economic growth due to poor governance and mismanagement. As a result, the contribution of natural resource development to the country’s economic growth has been disproportionately minimal.

A number of studies show that Indonesia is one of the most resourceful countries in term of mining potential and cultivation land. However, its resource mismanagement and poor governance regime have failed to make the country attractive for investment and instead choked the otherwise effective engine for the economic growth.

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Japan’s nickel smelters to be hit hard by Indonesia export ban (Reuters U.S. – November 21, 2013)

 http://www.reuters.com/

TOKYO – Nov 21 (Reuters) – Japanese nickel smelters will be severely impacted by Indonesian bans on exports of unprocessed mineral ores due in January as Japan imports 43 percent of ferro-nickel materials from Indonesia, the head of mining industry body said on Thursday.

With a current account deficit at a near-record high, the Indonesian government is scrambling to ease nationalistic resource rules that were passed more than a year ago, including a ban on mineral ore exports from January 2014.

Southeast Asia’s largest economy is the world’s top exporter of nickel ore, thermal coal and refined tin, and home to the world second-biggest copper mine.

“So far, Indonesia has not come up with any specific actions to ease its new mining law. We are worried about it,” Hiroshi Yao, Chairman of Japan Mining Industry Association (JMIA), told a news conference. “If Indonesia’s export restrictions of unprocessed mineral ore go into effect next year, an impact on Japanese nickel smelters will be big,” he said.

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China’s $100,000 aid ‘measly,’ judged by its Philippine mining take – by Jarius Bondoc (The Philippine Star – November 20, 2013)

http://www.philstar.com/

Talk about fair-weather friend. “As hundreds of thousands of Filipinos struggled to find food, water, shelter and the bodies of loved ones in the wake of Typhoon Haiyan, China quickly dipped into its world-leading $3.7 trillion of currency reserves and came up with … all of $100,000.” That Bloomberg news lead captured the general recoil at how the world’s second-largest economy treats an Asian neighbor. Other headlines stated “cheapskate,” “paltry,” “miserly” and, in one mainland-Chinese daily, “ungenerous.”

Beijing could not have missed the effects of history’s strongest ever typhoon to make landfall. Global networks had tracked Haiyan’s ruin of the Philippines, where three-fourths of families have Chinese blood. Undeterred by Philippine mountain ranges, the storm crossed over the sea to hit China. One drowned and seven went missing in Hainan, and many areas were flooded in Guangxi provinces. Beijing came upon a chance to show amity and soft power. Yet it chose to be petty, due to sea disputes with Manila. With trade overshooting $36 billion in 2012, China often calls the Philippines “partner.”

In the first hours of Filipinos’ distress, the world sprang to the rescue. The US rushed in an aircraft carrier group laden with emergency crews and $20-million relief. Britain, Japan, and Korea sent trucks, food, and cash of, in turn, $16 million, $10 million, and $5 million. Donations poured in from Australia, $28 million; European Union, $17 million; Vatican, $4 million; Indonesia, $2 million; and Taiwan, which China labels its province, $200,000.

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COLUMN-China’s single-handed gold support act may not last – by Clyde Russell (Reuters U.S. – November 19, 2013)

http://www.reuters.com/

Clyde Russell is a Reuters market analyst. The views expressed are his own.

LAUNCESTON, Australia, Nov 19 (Reuters) – The most frightening concept for a gold miner or trader currently would be to contemplate a world without China.

Global gold demand fell to the lowest in four years in the third quarter, according to the World Gold Council, and the 21 percent drop from the same quarter in 2012 would have been far worse if it wasn’t for China. China is set to overtake India as the top gold consumer this year, and is already ahead on a rolling four-quarter basis.

Demand in China rose to 209.6 tonnes in the third quarter, up from 177 tonnes in the same quarter last year, largely driven by a 29 percent jump in jewellery demand.

In contrast, India’s consumption slumped 32 percent to 148.2 tonnes in the third quarter from the same period in 2012, as the government’s efforts to restrict imports became more effective.

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Indonesia Weighs Ore Ban as Citigroup Increases Nickel Forecast – by Yoga Rusmana & Eko Listiyorini (Bloomberg News – November 19, 2013)

http://www.bloomberg.com/

Indonesia will press on with a ban on raw-mineral exports next year, while signaling the curbs may be amended in practice, according to two officials who addressed a conference in the largest mined nickel producer. Prices rose.

“If we look at the existing law, yes by 2014 we are sure to implement this, but we also consider the effect and discuss it with parliament, how to deal with this,” said Bambang Adi, deputy to the coordinating minister for economic affairs.

Dede Suhendra, director of mining at the Energy and Mineral Resources Ministry, told the gathering: “We have to appreciate companies that are serious about building smelters.”

Indonesia is seeking to boost the value of commodity sales, and while a blanket ban is mandated by the 2009 Mining Law, the government may exempt companies that are operating or planning to build processing plants. Nickel is this year’s worst base-metal performer on the London Metal Exchange amid record stockpiles. Citigroup Inc. raised its nickel forecast yesterday, saying the proposed curbs are being mispriced by the market.

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Samsung seeks rare earth alternative, in list of future tech investments – by Ryan Huang (ZDnet.com – November 18, 2013)

http://www.zdnet.com/

Summary: The conglomerate unveils the first 27 projects under its US$1.4 billion 10-year research drive, which includes finding a substitute for rare earth material, neuromorphic processors and hybrid holographic 3D displays.

South Korean conglomerate Samsung will invest in the search for alternatives to rare earth materials, as part of its major research drive for new technologies.

Last week, it unveiled the first 27 projects under its Future Technology Cultivation Project, which will be backed with funding of 1.5 trillion (US$1.41 billion) of funding over the next 10 years, according to Joongang Daily. This is part of a wider push by South Korea announced in May to develop new growth engines for a creative economy.

There will be 7 areas of research for new materials This includes a project to develop optoelectronics materials that can substitute the use of rare earth materials, which is essential for making TVs, smartphones and other electronics. The supply of the material is currently dominated by China, and is subject to its export quotas.

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COLUMN-China reforms to extend commodity boom, boost competition – by Clyde Russell (Reuters India – November 18, 2013)

http://in.reuters.com/

(The opinions expressed here are those of the author, a columnist for Reuters.)

Nov 18 (Reuters) – China’s planned economic and social reforms should have the effect of extending the decade-long boom in demand for commodities, while at the same time making that demand more price sensitive.

While the 60-point reform plan still needs to be fleshed out, initial indications are that the appetite for resources by the world’s biggest commodity buyer is far from finished. From a longer-term perspective the most important parts of the plan include lifting the restrictions on rural migration to smaller cities and easing them for medium-sized cities.

This alone should ensure that China’s demand for iron ore, copper and other base metals remains robust as housing and infrastructure is created across the country to cater for rising urbanisation.

Much of this activity will also fly beneath the radar, as it will take place away from the mega-cities such as Beijing and Shanghai, but this doesn’t mean the commodity demand will be any less real.

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3 Major Reasons Why China’s Commodities Super-Cycle Is Toast – by Stuart Burns (Metal Miner.com – November 14, 2013)

http://agmetalminer.com/

Some would argue the super-cycle is already over and in terms of double-digit growth, it almost certainly is.

But even Chinese growth of 7% today is sucking up commodities at a faster rate than 10-12% was in 2007, simply because it is 7% of a much bigger GDP number.

Miners have taken heart from recent rises in the rate of GDP growth to sustain their belief the economy has bottomed and will continue to rise into next year. And indeed it may: as we wrote recently, the Chinese economy is benefitting from a mini-stimulus this summer that supported investment in infrastructure and seems to have boosted the fortunes of the crucial construction industry.
But – and you know there is nearly always a but with us – some are not so sanguine about China’s medium- to longer-term growth prospects.

The Chinese communist party is meeting this month for the third plenum of the party’s 18th Central Committee to announce policy initiatives aimed at steering the economy through the major challenges it will face over the next 10 years and beyond.

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Implications of Indonesia mining law clear but consequences are not – by Peter Alford (The Australian – November 13, 2013)

http://www.theaustralian.com.au/business

IT took 4 1/2 years for regulations to be published giving teeth to the foreign investment provisions of Indonesia’s mining law – but what teeth!

Ministry of Energy and Mineral Resources Regulation 27/2013, when it appeared two months ago, crystallised almost everything that worried foreigners about the tone and intent of the mining law passed in 2009.

Although one key intent was to re-create a reliable framework for foreign investment – which, outside coal, remains critical to developing Indonesia’s mineral resources – the law is characterised by a general suspicion of mining activity, a particular impatience with foreign ownership, unsparing regulation and government rent-seeking.

Under MEMR 27/2013 the divestment schedule for mine production licences (production IUPs) is as severe as foreshadowed – from maximum 80 per cent foreign ownership in year six to 49 per cent in year 10 – with national, provincial and local governments having first rights of acquisition.

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Mongolia gears up for the fight of its mining life – by Frik Els (Mining.com – November 11, 2013)

http://www.mining.com/

On November 3 Mongolia’s new, friendlier foreign investment law came into force. Probably not a day too soon. The Asian nation of three million citizens, dependent on the mining sector to fuel growth, is desperate to turn around the slump in its economy and the steep fall-off in foreign investment.

Foreign direct investment in the country dropped 49% to September 2013 compared to last year which already marked a 17% year-on-year decline, the value of the currency, the tugrik, is down 20% this year, inflation has returned to double digits and the Mongolian central bank’s off-balance sheet spending is burning through foreign reserves as foreign debts balloon to 55% of GDP.

The path to prosperity for Mongolia, ranked 155th in the world according to GDP per capita, has always been a rocky one. The country has been bailed out by the IMF no fewer than five times and it suffers a domestic bank failure on average every 18 months.

While the changes to the 2012 Strategic Entities Foreign Investment Law (SEFIL) including greater certainty surrounding mining taxes and royalties and the scrapping of the distinction between private foreign and domestic investors are being universally welcomed as a positive step, a number of issues remain unresolved.

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