JAKARTA. The national output of a number of commodities has dropped significantly this year, as expected, on account of the governments mineral ore export ban.
The incoming administration, led by president-elect Joko "Jokowi" Widodo, is expected to soon lay out clear policies in the mineral sector, which has been severely impacted by the ban.
Only a few million tons of ore were produced during the January to August period this year, most likely only to meet domestic demand, figures from the Energy and Mineral Resources Ministry’s directorate genera] of mineral and coal showed.
The production of bauxite, for example, was a mere 2.8 million tons during the January-August period, compared to almost 60 million tons throughout last year. This year’s output is expected to see a few additional tons by year-end.
"The production of several minerals was from newly established smelters, such as nickel pig iron products," mineral and coal director general R. Sukhyar said.
On Jan. 12, the government banned overseas shipments of mineral ores as part of an attempt to boost the country’s downstream industry. Only processed minerals with a regulated purity level and end products of metal are allowed to be exported.
The government expects that in 2017, the country will only export mineral end products, instead of raw ore. In the meantime, it is still allowing the export of concentrates, such as copper concentrate produced by PT Freeport Indonesia and PT Newmont Nusa Tenggara, until 2017.
Despite an ongoing legal battle at the Constitutional Court over the 2009 Mining Law, which is the legal basis for the controversial export ban policy, foreign investors are seeking to develop smelters to process bauxite and nickel ores - the two main commodities in Indonesia - with the help of local partners.
"However, in general, foreign investors are still waiting for the new government. It will soon assume office, but investors are waiting for specific policy in the sector," Tony Wenas, the deputy chairman of the Indonesian Mining Association, said.
Most bauxite miners closed down their businesses following the ore export ban because domestic processing facilities were unable to absorb the entire nation’s bauxite output.
The only bauxite processing facility that exists in the country is a smelter called the chemical grade alumina (CGA) plant owned by state-owned diversified miner PT Aneka Tambang. The CGA plant only needs around 850,000 wet metric tons of bauxite a year to produce at its capacity of around 200,000 tons of alumina.
Should foreign investors build partnership with local players and the process of obtaining business permits be streamlined, new bauxite smelters will be ready by 2017, when the country will fully ban the export of minerals that have not been refined into end products. More smelters mean that bauxite mining can resume.
There are currently 64 smelters being worked on, ranging from bauxite to manganese processing facilities, according to government figures. Freeport Indonesia is currently working on a plan to develop a copper smelter to process its copper concentrate in the country. The mineral and coal office had also asked Newmont Nusa Tenggara to build its own smelter.
The director for mineral at the mineral and coal directorate general, Edi Prasodjo, said mining firms that were still without processing facilities should start thinking about developing them to survive in Indonesia.
Source : The Jakarta Post, October 20, 2014