Arrested development: why Indonesia lifted its mining export banBy Eva Grey
The Indonesian Government is hoping to kick-start its economy by lifting a partial ban on exports of metal ore and mineral concentrates, a policy originally aimed at boosting domestic processing and reducing the South East Asian nation’s exposure to volatile commodity prices. Julian Turner reports.
https://www.mining-technology.com/features/featurearrested-development-why-indonesia-lifted-its-mining-export-ban-5760809/In January, the Indonesian Government ended months of speculation by lifting its partial ban on the export of unprocessed minerals, underlining not only the parlous state of South East Asia’s largest economy, but also its status as a major supplier of nickel ore and bauxite, for aluminium production.
The controversial policy was intended both to boost smelting capacity by developing higher value domestic processing facilities and reduce Indonesia’s exposure to volatile global commodity prices.
Instead, mining industry leaders such as Tedy Badrujaman, CEO of state-controlled Antam, which had its numbers hit hard by the ban on nickel ore exports in 2014, argued that the law not only hurt revenues but also threatened to decimate local economies, particularly in Kalimantan and Sumatra.
Faced with industry unrest, a significant budget deficit, and having missed its 2016 revenue target by $17.6bn, the government under President Joko Widodo had little choice but to perform a volte face.
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"Chinese companies will be most unhappy because they have invested something like $15bn in developing smelters that are already in operation."
Jonatan Handojo, executive director of the Processing and Smelting Companies Association (AP3I), told Reuters that the new policy "damages Indonesia's image throughout the world and makes us look like our laws and regulations can be changed just like that".
"Chinese companies will be most unhappy because they have invested something like $15bn in developing smelters that are already in operation," Handojo said, adding that the flip-flop nature of Indonesian policy-making could potentially damage the country’s economic relations with China.
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Mining contributed 14% to total export revenue in both 2014 and 2015, a figure the government expects will increase once its processing and refining facility construction programme is complete.
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