The Jakarta Post, Jakarta | Business | Wed, January 30 2013,
Experts have called on the government to provide mining companies with incentives to encourage them to add value to the mineral ores they sell in overseas markets.
Without incentives, the companies will be unlikely to be able to comply with the regulation banning the export of unprocessed ores by 2014. The Indonesian Mining Experts Association’s (Perhapi) newly-elected chairman Achmad Ardianto said his association fully supported the regulation which is set out in the Energy and Mineral Resources Ministerial Decree No. 7/2012 on mineral processing.
He said, however, that mining companies might need government support to be able to export processed ores as scheduled. “We understand that the government wants to add value to the downstream sector. At the same time, companies are calling for the repeal of the decree. The government has done the right thing but they should only execute the plan when companies are ready,” he said at his inauguration in Jakarta on Monday.
“The regulation requires companies to build smelters to continue shipping ores abroad and it’s going to take time and money to do that. The scheme will hurt companies if the government doesn’t help them,” Achmad, who is also human resources director at the mining company PT Aneka Tambang, said.
Budi Santoso, the head of the association’s working group for mining policy, said that although the regulation was intended to increase the country’s mining-based income, it did not properly address the current needs and realities of existing businesses.
“The government hasn’t calculated the plan precisely. A company can only build a smelter within eight to nine years after it gets its mining permit, the time of which is allocated for exploring the land, requesting another permit for the smelter and later construct it. Each of these phases needs two to three years to accomplish and the companies might not be ready to implement the regulation by 2014,” Budi, who is the president director for Indonesia SRK Consulting, said.
“The government needs to either fund the building of smelters or ease the permit-issuing process, because some companies say that they need around 90 permits to actually build one smelter,” Budi said.
Budi, however, declined to say what year he thought the companies would be ready to carry out the plan, simply saying that it took “more than just five years after the 2009 Mining Law came into effect.”
The ministerial decree was a supporting regulation of the 2009 law.
The Mining Law stipulates that Indonesia will completely ban exports of unprocessed ores starting from 2014 as part of its policy of strengthening the country’s upstream mining industry, and the ministerial decree was drawn up to avoid over-exploitation of unprocessed ores prior to the target year.
The decree, along with the Energy and Mineral Resources Ministerial Decree No. 11/2012, restricts exports of unprocessed ores by demanding that mining firms obtain a clean-and-clear status from the Energy and Mineral Resources Ministry showing their commitment to building an ore-processing smelter.
The regulation states that the smelter may be built individually or by forming partnerships with other companies, and some Chinese and Russian companies have reportedly expressed interest in building the smelters.
Recently, however, the Supreme Court annulled several articles of the decree, including the ban on unprocessed-ore exports, after the country’s nickel-mining association filed a complaint to the Supreme Court last year asking for a review.
Despite the ruling, the ministry’s head of legal and public relations, Susyanto, said that the government would still carry on with the plan and would adjust the decree to increase the value of the downstream industry.
Experts have called on the government to provide mining companies with incentives to encourage them to add value to the mineral ores they sell in overseas markets.
Without incentives, the companies will be unlikely to be able to comply with the regulation banning the export of unprocessed ores by 2014. The Indonesian Mining Experts Association’s (Perhapi) newly-elected chairman Achmad Ardianto said his association fully supported the regulation which is set out in the Energy and Mineral Resources Ministerial Decree No. 7/2012 on mineral processing.
He said, however, that mining companies might need government support to be able to export processed ores as scheduled. “We understand that the government wants to add value to the downstream sector. At the same time, companies are calling for the repeal of the decree. The government has done the right thing but they should only execute the plan when companies are ready,” he said at his inauguration in Jakarta on Monday.
“The regulation requires companies to build smelters to continue shipping ores abroad and it’s going to take time and money to do that. The scheme will hurt companies if the government doesn’t help them,” Achmad, who is also human resources director at the mining company PT Aneka Tambang, said.
Budi Santoso, the head of the association’s working group for mining policy, said that although the regulation was intended to increase the country’s mining-based income, it did not properly address the current needs and realities of existing businesses.
“The government hasn’t calculated the plan precisely. A company can only build a smelter within eight to nine years after it gets its mining permit, the time of which is allocated for exploring the land, requesting another permit for the smelter and later construct it. Each of these phases needs two to three years to accomplish and the companies might not be ready to implement the regulation by 2014,” Budi, who is the president director for Indonesia SRK Consulting, said.
“The government needs to either fund the building of smelters or ease the permit-issuing process, because some companies say that they need around 90 permits to actually build one smelter,” Budi said.
Budi, however, declined to say what year he thought the companies would be ready to carry out the plan, simply saying that it took “more than just five years after the 2009 Mining Law came into effect.”
The ministerial decree was a supporting regulation of the 2009 law.
The Mining Law stipulates that Indonesia will completely ban exports of unprocessed ores starting from 2014 as part of its policy of strengthening the country’s upstream mining industry, and the ministerial decree was drawn up to avoid over-exploitation of unprocessed ores prior to the target year.
The decree, along with the Energy and Mineral Resources Ministerial Decree No. 11/2012, restricts exports of unprocessed ores by demanding that mining firms obtain a clean-and-clear status from the Energy and Mineral Resources Ministry showing their commitment to building an ore-processing smelter.
The regulation states that the smelter may be built individually or by forming partnerships with other companies, and some Chinese and Russian companies have reportedly expressed interest in building the smelters.
Recently, however, the Supreme Court annulled several articles of the decree, including the ban on unprocessed-ore exports, after the country’s nickel-mining association filed a complaint to the Supreme Court last year asking for a review.
Despite the ruling, the ministry’s head of legal and public relations, Susyanto, said that the government would still carry on with the plan and would adjust the decree to increase the value of the downstream industry.
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