By Muhamad Al Azhari, Tito Summa Siahaan & Novy
Lumanau on 8:52 am January 13, 2014.
Small miners are likely to feel the brunt of the nation’s ban on the export of mineral ore, which could leave more than 2 million people out of work, and executives expressed disappointment that implementation of the mining law serves as more of politicking than common sense.
Few details are known about the ban, which went into effect on Sunday morning, following a cabinet meeting that lasted into Saturday night at President Susilo Bambang Yudhoyono’s private residence in Puri Cikeas, Bogor, West Java.
“It is very disappointing. On an issue that affects many people’s interest, the government cannot provide clarity. I cannot interpret what’s the underlying message from the statement of some cabinet ministers,” said Agus Suhartono, the deputy chairman of the Indonesian Mineral Entrepreneurs Association (Apemindo).
“What came out was more uncertainty. How come the business sector is treated like it is part of the political theater?” said Agus, who is also chief operating officer of Singapore-based Ibris Nickel, the third-largest nickel miner in Indonesia.
The company has halted operations since Dec. 31 due to concerns about the export ban.
Ibris — which is controlled by Indonesian businessman Amirsyah Risjad — produces around 2 million metric tons of nickel ore per year and employs about 1,400 workers at its mining site in North Konawe, Southeast Sulawesi. Shipments of its nickel ore were no longer allowed as of Sunday.
Apemindo — which has around 680 registered members — estimates that almost 30,000 mine workers have been laid off as mining companies cut back on operations on concern of the ban.
The National Solidarity of Mine Workers (Spartan) estimated a bigger number of layoffs. Spartan calculates at least 2.878 million workers being laid off if the government insists in implementing the ban, said Juan Forti Silalahi, in a press release sent to the media in Jakarta on Saturday.
Limited details
On Saturday, journalists were only provided with statements from some members of the cabinet as the president signed the government regulation (PP) that enforced the Mining Law 2009, which stipulated that mining companies with no smelting capacity will not be allowed to ship unprocessed minerals abroad.
“During the discussion in the making of the PP, we also consider about the workforce [in the sector]. We don’t want to allow massive layoffs after we have created jobs with hard work,” Energy and Mineral Resources Minister Jero Wacik said on Saturday after the regulation was signed.
He said additional ministerial regulations would follow, namely from the energy, finance and trade ministries.
Agus of Apemindo said there were difficulties in getting details about the PP.
“Why does the government hide the most-awaited details? Don’t they have the details? Are they afraid of their own people? I can’t understand the logic,” he said.
Apemindo and a bauxite producer association sent a statement to the media on Sunday, saying that they want the same treatment provided by the government to copper miners.
Such treatment would give a reprieve to 66 companies, including Freeport Indonesia, which is a unit of Freeport-McMoRan Copper & Gold, and Newmont Nusa Tenggara, a subsidiary of Newmont Mining.
Freeport Indonesia and NNT together make up 97 percent of Indonesia’s copper production.
Both companies’ level of concentrate is 20 percent to 30 percent of copper ore, and they send some of their production for refinement to Smelting, which currently is the only copper smelter in Indonesia.
Setting purified levels
Didie Suwondho, the head of Kadin’s special taskforce for mineral processing, hoped that upcoming details will not change from what had been agreed between the government and the business community last week.
What had been agreed upon is that iron ore (sand) needs 58 percent of purification, copper 15 percent, zinc 52 percent, lead 57 percent, he said.
Indonesia Gold and Copper Association chief Natsir Mansyur said last week that the government agreed the minimum purification of nickel matte would be 70 percent, ferronickel 10 percent, and nickel pig iron 4 percent.
The reprieve to the 66 companies might also suggest the mining industry is being consolidated, as construction of smelters could take years and effectively push smaller miners out of business.
There are thousands of miners operating in Indonesia, according to R. Sukhyar, the newly appointed director general of coal and mineral resources at the Energy Ministry. He didn’t give an exact number.
The government, led by Sukhyar, has been in discussions with the Indonesian Chambers of Commerce and Industry (Kadin) and related mining associations, including Apemindo and the Indonesia Mining Association (IMA), about the level of purity requirement.
Apemindo and the bauxite group requested the government to ease the requirement on smelting bauxite into alumina. They said that in the last meeting, the government wanted miners to purify bauxite into 99 percent smelter grade alumina and 90 percent chemical grade alumina. Smelter grade alumina is used for the smelting of aluminum metal and chemical grade alumina is widely used in the production of electronic materials such as integrated circuit packaging and for LCD glass.
The two groups said investment for a smelter could be more than $1 billion, with annual capacity at up to two million tons of alumina.
With such large investment, companies need to be allowed to export the ore to help finance the construction of the expensive smelter, they said in the statement said. Additionally, they say that most bauxite shipped overseas is neither classified as raw mineral or ore, because the aluminium oxide level is at more than 45 percent.
“Entrepreneurs in the bauxite sector request equal treatment to be allowed to be treated like the copper producers. In the previous discussion, the government gives flexibility for a copper miner by allowing miners to export copper at the minimum processing level of copper concentrates at 15 percent,” the two groups said.
While some of the biggest nickel miners, including Vale Indonesia, which specializes in nickel matte, and Aneka Tambang, which specializes in ferronickel, have smelters, many other nickel miners are sending raw material overseas.
Nickel miner Mobi Jaya Persada, which ships nickel ore that is used in stainless steel production, for example, is preparing for the worst, according to Reuters.
“We’ve already started reducing the workforce and we’re going to continue if the regulation stops ore exports,” said Roy Kojongan, business development manager for Mobi Jaya Persada.
He was quoted by Reuters as saying on Sunday that the company had already laid off half of its 100 employees and only had 44 employees left.
The Golkar Party has been ready to attack the government’s inconsistency on the mineral ore export ban.
Bobby Adhityo Rizaldi, a member of House Commission VII that oversees energy and mineral resource affairs, said last week that the government must be consistent in implementing the law and not need to worry about the threat of possible layoffs. “No excuses,” he said.
— Additional reporting from Reuters
Lumanau on 8:52 am January 13, 2014.
Small miners are likely to feel the brunt of the nation’s ban on the export of mineral ore, which could leave more than 2 million people out of work, and executives expressed disappointment that implementation of the mining law serves as more of politicking than common sense.
Few details are known about the ban, which went into effect on Sunday morning, following a cabinet meeting that lasted into Saturday night at President Susilo Bambang Yudhoyono’s private residence in Puri Cikeas, Bogor, West Java.
“It is very disappointing. On an issue that affects many people’s interest, the government cannot provide clarity. I cannot interpret what’s the underlying message from the statement of some cabinet ministers,” said Agus Suhartono, the deputy chairman of the Indonesian Mineral Entrepreneurs Association (Apemindo).
“What came out was more uncertainty. How come the business sector is treated like it is part of the political theater?” said Agus, who is also chief operating officer of Singapore-based Ibris Nickel, the third-largest nickel miner in Indonesia.
The company has halted operations since Dec. 31 due to concerns about the export ban.
Ibris — which is controlled by Indonesian businessman Amirsyah Risjad — produces around 2 million metric tons of nickel ore per year and employs about 1,400 workers at its mining site in North Konawe, Southeast Sulawesi. Shipments of its nickel ore were no longer allowed as of Sunday.
Apemindo — which has around 680 registered members — estimates that almost 30,000 mine workers have been laid off as mining companies cut back on operations on concern of the ban.
The National Solidarity of Mine Workers (Spartan) estimated a bigger number of layoffs. Spartan calculates at least 2.878 million workers being laid off if the government insists in implementing the ban, said Juan Forti Silalahi, in a press release sent to the media in Jakarta on Saturday.
Limited details
On Saturday, journalists were only provided with statements from some members of the cabinet as the president signed the government regulation (PP) that enforced the Mining Law 2009, which stipulated that mining companies with no smelting capacity will not be allowed to ship unprocessed minerals abroad.
“During the discussion in the making of the PP, we also consider about the workforce [in the sector]. We don’t want to allow massive layoffs after we have created jobs with hard work,” Energy and Mineral Resources Minister Jero Wacik said on Saturday after the regulation was signed.
He said additional ministerial regulations would follow, namely from the energy, finance and trade ministries.
Agus of Apemindo said there were difficulties in getting details about the PP.
“Why does the government hide the most-awaited details? Don’t they have the details? Are they afraid of their own people? I can’t understand the logic,” he said.
Apemindo and a bauxite producer association sent a statement to the media on Sunday, saying that they want the same treatment provided by the government to copper miners.
Such treatment would give a reprieve to 66 companies, including Freeport Indonesia, which is a unit of Freeport-McMoRan Copper & Gold, and Newmont Nusa Tenggara, a subsidiary of Newmont Mining.
Freeport Indonesia and NNT together make up 97 percent of Indonesia’s copper production.
Both companies’ level of concentrate is 20 percent to 30 percent of copper ore, and they send some of their production for refinement to Smelting, which currently is the only copper smelter in Indonesia.
Setting purified levels
Didie Suwondho, the head of Kadin’s special taskforce for mineral processing, hoped that upcoming details will not change from what had been agreed between the government and the business community last week.
What had been agreed upon is that iron ore (sand) needs 58 percent of purification, copper 15 percent, zinc 52 percent, lead 57 percent, he said.
Indonesia Gold and Copper Association chief Natsir Mansyur said last week that the government agreed the minimum purification of nickel matte would be 70 percent, ferronickel 10 percent, and nickel pig iron 4 percent.
The reprieve to the 66 companies might also suggest the mining industry is being consolidated, as construction of smelters could take years and effectively push smaller miners out of business.
There are thousands of miners operating in Indonesia, according to R. Sukhyar, the newly appointed director general of coal and mineral resources at the Energy Ministry. He didn’t give an exact number.
The government, led by Sukhyar, has been in discussions with the Indonesian Chambers of Commerce and Industry (Kadin) and related mining associations, including Apemindo and the Indonesia Mining Association (IMA), about the level of purity requirement.
Apemindo and the bauxite group requested the government to ease the requirement on smelting bauxite into alumina. They said that in the last meeting, the government wanted miners to purify bauxite into 99 percent smelter grade alumina and 90 percent chemical grade alumina. Smelter grade alumina is used for the smelting of aluminum metal and chemical grade alumina is widely used in the production of electronic materials such as integrated circuit packaging and for LCD glass.
The two groups said investment for a smelter could be more than $1 billion, with annual capacity at up to two million tons of alumina.
With such large investment, companies need to be allowed to export the ore to help finance the construction of the expensive smelter, they said in the statement said. Additionally, they say that most bauxite shipped overseas is neither classified as raw mineral or ore, because the aluminium oxide level is at more than 45 percent.
“Entrepreneurs in the bauxite sector request equal treatment to be allowed to be treated like the copper producers. In the previous discussion, the government gives flexibility for a copper miner by allowing miners to export copper at the minimum processing level of copper concentrates at 15 percent,” the two groups said.
While some of the biggest nickel miners, including Vale Indonesia, which specializes in nickel matte, and Aneka Tambang, which specializes in ferronickel, have smelters, many other nickel miners are sending raw material overseas.
Nickel miner Mobi Jaya Persada, which ships nickel ore that is used in stainless steel production, for example, is preparing for the worst, according to Reuters.
“We’ve already started reducing the workforce and we’re going to continue if the regulation stops ore exports,” said Roy Kojongan, business development manager for Mobi Jaya Persada.
He was quoted by Reuters as saying on Sunday that the company had already laid off half of its 100 employees and only had 44 employees left.
The Golkar Party has been ready to attack the government’s inconsistency on the mineral ore export ban.
Bobby Adhityo Rizaldi, a member of House Commission VII that oversees energy and mineral resource affairs, said last week that the government must be consistent in implementing the law and not need to worry about the threat of possible layoffs. “No excuses,” he said.
— Additional reporting from Reuters
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