Tito Summa Siahaan – In the latest blow to the national government's push to tighten mining industry regulations, the Supreme Court announced on Thursday details of a ruling that would benefit local governments and mid-sized miners operating in Indonesia.
The court revealed the details of a November ruling that annulled several articles in the Energy and Mineral Resources Ministry Regulation No. 9, which was issued last year. The Supreme Court ruling stifled central government efforts to tighten raw materials exports and reorganize the mining industry.
The court annulled four articles within the ministerial regulation, including article 21, which forbids mining concession holders from exporting raw materials.
The court argued that the issue should not be regulated by the ministry because "the law clearly states that the issue should be covered by government regulations."
The court was referring to the 2009 Law on Coal and Mineral Resources, which serves as the legal basis for the ministerial regulation. The law states that mining concession holders must submit a plan to process raw minerals domestically before 2014.
The court also stripped the ministry of its authority to approve partnerships for smelting projects and appoint mining concession holders to build smelting facility by annulling the three other articles. Through its ruling, the court effectively handed authority back to local governments, in accordance with the 2009 law.
Shelby Ihsan, the chairman of the Indonesia Nickel Association, which brought the case to the court, welcomed the details of the ruling, saying it proved the association's claim.
The association was the first to reveal details on the ruling to the public last year, but details were sketchy at the time, prompting government officials and mining executives to doubt its authenticity and implications.
Shelby also argued that the ruling should lead to the annulment of other regulations, including Energy and Mineral Resources Regulation No. 11, which states that export permits should not be given without a recommendation from the minister or director general, and before miners secure a clean and clear status from the government.
The association also wants an annulment on related regulations issued by the Finance Ministry – which has imposed a 20 percent export tax on 65 types of raw minerals – and the Trade Ministry, which set a quota for export volumes. When these regulations were enacted last year, the government argued that it detected uncontrolled growth in raw minerals exports since 2009.
Natsir Mansyur, deputy chairman for trade distribution and logistics at the Indonesian Chamber of Commerce and Industry (Kadin), said the ruling should serve as a lesson from the government in making regulations without the business community's participation.
Natsir said miners suffered Rp 6.5 trillion ($673 million) in losses in the first eight months since the ministerial regulation was enacted.