1 April 2020 (closed)
USD/IDR (16,413) +46.00 +0.28%
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After having reported yesterday (26/12) that Indonesia's ban on the export of unprocessed minerals, stipulated in Mining Law No.4/2009 (which is set to become in force from 12 January 2014), may be delayed, more and more signs are pointing towards a postponement of this law. Minister of Energy and Mineral Resources, Jero Wacik, said that the government is considering to delay the implementation of the law by two or three years as the ban will cause increased unemployment and the cease of mining operations.
Mining Law No.4/2009 is a controversial law which stipulates that minerals have to be processed domestically before exports are allowed. This law brought a shock to Indonesia's mining sector as a significant portion of exports constitute raw materials, while the ban is also not in line with long-standing contracts between the (local) government and mining companies. The government designed Mining Law No.4/2009 to generate more value-added revenues while also limiting the influence of foreign participation in the mining sector ('resource nationalism').
In order to obey the new law, minerals have to be processed domestically first before exports are allowed but since there is a lack of processing capacity within the country it means that companies (individually or in joint cooperation) have to establish smelters. Currently, 125 proposals for the construction of smelters have been received by the government (of which 28 are under construction). Ten smelters are expected to be operational in 2014. This means that smelting capacity next year is still far too low and implementation of the new law would imply a near stop to the country's mineral exports.
• Indonesia May Review its Ban on the Export of Unprocessed Minerals
• Go-Ahead for Indonesia's Controversial Ban on Unprocessed Mineral Exports
• Indonesia Studying Temporary Exemption for Export of Raw Minerals
• Export Ban on Unprocessed Minerals Temporarily Pressures Trade Balance