Bagus BT Saragih and Linda Yulisman – The government may provide relief for mineral exporters, who have cried foul over the policy of banning raw ore exports from next year, by utilizing "loopholes" in the 2009 law on minerals and coal mining.
Coordinating Economic Minister Hatta Rajasa said the government was seeking ways to allow mining companies that had concrete plans to build smelters to be able to export ore, even if their smelters were not able to process their entire output.
"For miners that clearly don't have any processing facilities, let alone plans, it will be easy for me: they will be banned from exporting. No excuses," he said.
He said he still needed to consult legal experts to ensure there would be no violations of the law, and hoped to present the conclusions to President Susilo Bambang Yudhoyono later this week in a planned limited Cabinet meeting. The President would have the final say on the proposal, the minister said.
The option of seeking legal avenues was taken after the House of Representatives recently rejected a proposal to exempt certain mining companies from the rule.
The law and its implementing regulations will only allow exports of ore that have been locally processed as of Jan. 12, to help develop the downstream industry and create added value.
Among miners opposed to the government's plan is PT Freeport Indonesia, a subsidiary of US-based Freeport McMoRan Copper and Gold Inc., which has persistently refused to build a smelter to process its gold and copper ore.
It has also warned it will have to cut its production by 60 percent, since the existing smelting plant it uses will not be able to process the company's entire ore output, thereby laying off more than half of its staff, or around 16,000 workers.
Newmont Nusa Tenggara (NNT), an Indonesian subsidiary of the US-based Newmont Corp., has also said that it will have to halt mining operations if the ban is imposed.
Trade Ministry director general for foreign trade Bachrul Chairi said recently that the implementation of the ore export ban would cause losses of US$7.13 billion next year.
Hatta also acknowledged that Japan's business community had tried to lobby Yudhoyono over the policy during his visit to Tokyo last week. Indonesia supplied 44 percent of Japan's nickel ore imports of 4.7 million tons last year, trade data quoted by Bloomberg shows.
Indonesia also provided more than half of China's nickel ore imports of 65 million tons in 2012, along with 47 percent of the Philippines' imports.
Didie W. Soewondho, who leads the mineral downstream task force of the Indonesian Chamber of Commerce and Industry (Kadin), said exemptions from the ban should be allowed for miners with serious intentions to build smelters locally.
In its proposal to the government, the business group requested that all holders of mining permits and special mining permits be allowed to export mineral ores. Similarly, holders of work contracts should be permitted to sell mineral concentrates during the period of construction of their smelters.