JAKARTA Dec 6 Indonesia's mining industry will
be killed off by a planned ban on unprocessed mineral exports, a
domestic miners' association said, accusing the government of
favoring international firms that can more easily adapt to the
The ban by Indonesia, the world's top exporter of nickel
ore, coal and refined tin and a major supplier of bauxite, would
force miners to build smelters or sell ore to companies with
smelters, reducing profit margins for smaller operators.
"The national mining industry will die before it develops,"
the Indonesian Mineral Entrepreneurs Association said in a
statement, arguing that the ban favours firms such as Freeport
McMoran Copper & Gold Inc and Newmont Mining Corp
that have been operating in Indonesia for decades.
The new rules, due to take effect from Jan. 12, are part of
efforts by Indonesia to win a greater share of its resource
wealth, but opposition has been mounting amid depressed metal
prices and a widening trade deficit.
Mining contributes about 12 percent of gross domestic
product (GDP) for Southeast Asia's largest economy.
Lawmakers on Thursday rejected a central government proposal
to allow miners with serious smelter plans in place to get an
exemption from the ban.
Regional governments also plan their own export rules, that
may further complicate matters for miners.
Shipments of bauxite have risen sharply as buyers stockpile
in preparation for the planned stoppage, while potential mining
investors such as UC Rusal and
Glencore-Xstrata Plc are watching for clues on how the
rule will be implemented.
The mineral entrepeneurs association said long-standing
international miners would be able to build smelters, "after
looting our natural resources and enjoying especially low
royalties for decades."
They would also be able to buy ore cheaply from local miners
that couldn't afford to build smelters and other infrastructure.
The local industry would be "killed", and only a handful of
miners would survive, it said.
Newmont declined to comment. A spokeswoman for Freeport was
not immediately available.
Nomura has said the rule could cost Indonesia as much as
$400 million a month in lost export revenue, which would have a
substantial impact on its $700-million-a-month trade deficit.
However, the government has said the impact of the ore
export ban would be "more or less neutral or relatively
"Though unprocessed material exports will decrease, we have
a number of policies that would be able to compensate," Finance
Minister Chatib Basri told reporters on Friday.