View Issue #588 Now!
Indonesia’s mining exports at standstill after new rules
Indonesia’s metal ore and concentrate exports have ground to a complete halt, government officials said, signaling the turmoil in the mining sector after a ban on ore shipments and an export tax were imposed nearly two weeks ago.
Southeast Asia’s biggest economy introduced a controversial ore export ban on Jan. 12, although last-minute amendments aimed to ease the impact of the export ban on miners like Freeport-McMoRan Copper & Gold and Newmont Mining Corp . They now face a progressive export tax on concentrates.
“There has been no concentrate export since January 12,” Bachrul Chairi, director general of foreign trade at the trade ministry told Reuters. “As of now, no miners or companies have requested export approval for concentrate or processed ore from the trade ministry.”
Freeport Indonesia and Newmont are in talks with the government over the new rules and are yet to resume exports since the new tax was introduced, while the Mineral Entrepreneurs Association has filed a legal challenge against the ore export ban.
Under the new regulation, concentrate exports are allowed to continue for some minerals, including copper, lead, iron ore, zinc and manganese, though with different purity rules attached. Concentrates are an intermediate product between ore and metal, enriched with minerals as a result of processing. ID:nL3N0KP1GE]
“There is still no export for any kind of concentrates so far,” added Sukhyar, director general of coal mines and minerals at the energy and mines ministry. “Maybe in the middle of this year some of them can be exported.”
The surprise and last-minute inclusion of an escalating export tax on metal concentrates appears to have forced all other miners to stop shipments.
“It’s a problem because nobody can abide by the export tax, including Freeport,” said Erry Sofyan, secretary general of the Indonesian Bauxite and Iron Ore Entrepreneurs Association.
Government Revenue Under Pressure
Under the new rules the export tax for concentrates of lead, iron, zinc, ilmenite, titanium and manganese is 20 percent for 2014, but will rise to 60 percent by the second half of 2016.
Indonesia is also the world’s biggest exporter of nickel ore, refined tin, thermal coal, and home to the fifth-largest copper mine and top gold mine. Freeport and Newmont produce 97 percent of Indonesia’s copper.
Indonesia’s iron ore shipments to China jumped 72.5 percent last year to 17.6 million tons.
The Southeast Asian nation controls around 12-16 percent of global bauxite supplies, with China again a major buyer.
“Our supplier says the policy might be loosened next month, but right now it is forbidden,” said an iron ore trader based in China’s eastern Shandong province.
“We are planning to talk with some small miners in other countries like Malaysia, Thailand and the Philippines for possible supplies.”
Indonesia-based miners that process some or all of their metal production through smelters, like nickel producers PT Aneka Tambang and PT Vale Indonesia Tbk have escaped the full impact of the new rules.
The long-planned ore ban aims to eventually boost Indonesia’s profits from its mineral wealth by forcing miners to process their ores before export.
But there are fears a short-term cut in foreign revenue could widen the current account deficit, which has undermined investor confidence and hurt the rupiah currency.
The ban is expected to cut government revenue by as much as $820 million this year, the finance minister has said.
The average value of Indonesia’s ore and concentrate exports was about $500 million per month from January to October 2013, according to the central bank.
Thousands of mine workers had already been laid off ahead of the ban, sparking protests in Jakarta. (Reuters)
American Journal of Transportation
116 Court Street, Suite 5
Plymouth, MA 02360
© Copyright 1999–2014 American Journal of Transportation.All Rights Reserved.