SHANGHAI, Apr. 16 (SMM) – Jero Wacik, Indonesia’s Energy and Mineral Resources Minister said the Indonesian government will unlikely impose full ban on raw ore exports in 2014 largely because the country’s smelters are limited. Considering that it will take many years to amend laws, the government did not consider amending the 2009 Mining Law. Instead, the government would try to find “loopholes” in the law that would allow companies to continue to build smelters in the country while ensuring stable revenues for the government.  

Jero Wacik said companies without plans to build smelters in the country will be prohibited from exporting and that export tariff on nickel will be raised. He also reiterated that all mining companies must submit plant building plans before 2014 so as to promote the processing of raw ore in Indonesia.

His remarks were opposed by Martiono Hadianto, chairman of the Indonesian Mining Association, who noted that not all ore is suitable for processing in Indonesia. ITB research reveals that only iron ore, bauxite, nickel ore, copper ore and zinc ore can be processed in Indonesia. In order to build a smelter, two years are needed to raise funds alone. It will cost USD 1.2 billion to build a 200,000 mt/yr copper smelter. Given the current copper prices, it will take 28 years to recoup costs.

Martiono Hadianto urged the Indonesian government to decide as soon as possible if it is really necessary to implement export ban so that mining companies can sign contracts with buyers. He also warned that if the government insists on forbidding nickel ore exports from 2014, USD 8.1 billion will be lost each year in the country’s Freeport and Newmont Nusa Tenggara (NNT). This is because NNT has no smelting capacity and only a small quantity of copper is processed in Freeport.  

At present, only a small number of state-owned mining companies have their own smelters, such as Aneka Tambang.

According to Martiono Hadianto, if a complete ban is imposed, output decline will be reported in at least two mine sites and some people will lose jobs.  

Martiono Hadianto added that demand for copper is slack in Indonesia, where copper industry is underdeveloped, with annual growth rate at a mere 2-3%.

Panggah Susanto, Director General of Ministry of Industry Manufacturing Industry Base, said the government is planning building roads in order to promote the development of domestic base metals industries and improve demand for mineral products. He added that manufacturing accounts for 25.75% of Indonesia’s GDP, but only 2% is contributed by base metals industries.