JAKARTA. Concentrate export will be terminated on 12 January 2017. However, the government is facing dilemma in responding this termination. Exporting mineral will be considered as law violation. However, terminating the export will reduce state revenues, and increasing termination of employment potentials.

Not surprisingly, the government is in doubt in revising Government Regulation No 23/2010 on the Mineral and Coal Business Activities. This is the law umbrella for the export of concentrate.

According to information received by KONTAN, President Joko Widodo has signed the revision. However, the revision does not confirm whether export of concentrate will be allowed or not after 12 January 2017.

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Another source of KONTAN said that the government will remain allowing the export of concentrates. However, this is limited on five minerals, namely copper, iron sand, manganese, lead, and zinc, while exports of other mineral concentrates will be terminated.

This policy considered the conditions where Indonesia still lacks the smelter technology for those five commodities, while the markets for the processed minerals remain limited.

Furthermore, export of mineral concentrate requires mining companies to change the status of contract of work to special mining license (IUPK). Therefore, PT Freeport Indonesia may not export copper concentrates if the company maintains its contract of work status.

As the news was revealed, Vice Minister of Energy and Mineral Resources (ESDM) Arcandra refused to reveal the details of the revision.

Corporate Secretary of PT Aneka Tambang (Antam) Trenggono Sutioso said, with its status as state owned company (SOE or BUMN), Antam will support the policy on downstream mining industry. Let alone, the company owns nickel, gold, and alumina processing factories. Therefore, in general, Antam perceives that the policy will not harm the company.

However, Executive Director of the Association of Indonesia’s Mineral Companies Ladjiman Damanik said, there is a risk of the accumulation of low grade nickel stocks due to the lack of smelter in the country. “Nickel ore has high export price,” he said. Therefore, “We need another policy to create value added of low grade nickel ore,” Trenggono said.

Chairman of the Association of Indonesia’s Bauxite and Iron Ore Entrepreneurs Erry Sofyan said the policy on exports of five minerals concentrates is unfair. For an example, Indonesia has huge reserves of bauxite, while the domestic demands remain limited. “The government should allow the bauxite export to generate foreign exchange reserves,” he said. He estimates that Indonesia will loss as much as US$12 billion if the bauxite export is terminated.

(Muhammad Farid/Translator)