Jakarta pledges leeway for obedient miners
THE INDONESIAN government has reiterated that local miners, particularly nickel, bauxite and copper miners, will be allowed to export their products should they express a commitment to build their own smelters and be able to supply domestic smelters with at least 30 per cent of their input capacity.
President Joko “Jokowi” Widodo’s administration issued on Jan. 11 the fourth revision to Government Regulation No23/2010 on the management of mineral and coal businesses, which allows miners to continue exporting copper concentrates, certain amounts of low-grade nickel ore and washed bauxite under certain conditions.
“Nickel and bauxite miners can export after supplying 30 per cent of the input of existing domestic smelters. They also have to be committed to building their own smelters within five years,” Energy and Mineral Resources Minister Ignasius Jonan said Saturday in a press briefing.“We will monitor [the progress] every six months. If they fail to fulfill the commitment to build smelters, there will be no export licenc- es for nickel and bauxite miners.”
Jonan said there had been a misunderstanding over the newly-launched regulation, as many people interpreted that it was forcing local miners to funnel 30 per cent of their nickel or bauxite production into local smelters, even though, he said, the correct calculation was based on the total capacity of all domestic smelters.
For instance, the total input capacity of nickel smelters in the country currently stands at 16 million tons per year. Meanwhile, the total production for low-grade nickel — with nickel content below 1.7 per cent — stands at 10 million tonnes per year.
“So that means the nickel miners must sell to domestic smelters for about 30 per cent of the 16 million tonnes of smelter capacity, or equal to 4.8 million tonnes, not of the 10 million tonnes of production capacity,” he said. The government, Jonan continued, would serve as the “traffic manager” for the supply chain system in order to prevent unfair implementation of the regulation. For example, this is possible if there are only two or three companies supplying 4.8 million tons of nickel to local smelters through their own production.
According to the Processing and Smelting Companies Association (AP3I), 32 new smelters have been built in the country — 24 of which are nickel smelters — within the past four years with a total investment value of US$20 billion (Bt709 billion) .
The ban was a boon to rival producers as their output filled the hole, Bloomberg reported.
The Philippines became the world’s biggest supplier of mined nickel and the largest shipper to China. Now, their shares are tumbling. Nickel Asia Corp., the country’s top producer, fell 14 percent on Friday along with Japan’s Sumitomo Metal Mining Co. and GMK Norilsk Nickel PJSC.
The change in regulations may also upset Chinese investors that pumped money into developing Indonesia’s domestic processing industry. Citi-group had forecast a 180 per cent increase in capacity by 2020, to about 400,000 tonnes, according to Bloomberg.
