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By Fergus Jensen
JAKARTA Jan 22 Indonesia's Mineral
Entrepreneurs Association (APEMINDO) has filed a legal challenge
against a ban on ore exports introduced less than two weeks ago.
President Susilo Bambang Yudhoyono signed off on the
controversial ore export ban on Jan. 12, although last-minute
amendments eased the impact of the export ban on mining giants
Freeport McMoRan Copper & Gold and Newmont Mining Corp
which are now subject to an export tax.
Indonesia is the world's biggest exporter of nickel ore,
refined tin and thermal coal and is an important producer of
copper and gold. It is seeking to increase added value from its
mineral wealth but has been widely criticised for the ore export
ban, seen by many as unfeasible.
"If this policy is carried out it will kill mining
businesses," Revly Harun, a lawyer for APEMINDO, told Reuters on
Wednesday. "If they want to make smelters they need money for
that. We don't think this ore export ban is realistic."
"For several products, such as bauxite, there is no way they
can be processed domestically because of limitations," said
Harun, adding that the legal challenge focuses on the domestic
processing and purification of minerals.
Despite the changes to the mining export regulation, the new
rules are seen hitting domestic nickel and bauxite miners
hardest, and many have already begun shedding workers.
The APEMINDO challenge was filed to the Constitutional
Court, Indonesia's highest legal authority, on Jan. 16.
Mining law expert Bill Sullivan, foreign counsel at
Christian Teo Purwono & Partners in Jakarta, expressed doubts
over the outcome of the challenge.
"It would be a very brave man who gave any firm assessment
of how this may play out," he said, adding that other nickel and
bauxite mining groups could also challenge the ban "on the basis
of any number of arguments".
"PLAY NOT OVER"
Sullivan expects further legal challenges from other mining
groups to follow.
The ore export ban and associated export tax are one of
President Yudhoyono's biggest economic policy decisions since
taking office nearly 10 years ago, but have been met with
protests from miners large and small.
The Indonesian Nickel Association (ANI) said it was aware of
and supported the legal action against the mining law, but had
no plans in place to file their own legal challenge.
In late 2012, the association challenged and won a Supreme
Court case that overturned several chapters of an earlier
regulation banning ore exports.
"I agree fully that they went to the Constitutional Court,"
said Faisal Emzita, executive director of the Indonesian Nickel
Association. "The government is confusing," Faisal said
referring to security for investors.
"The play is not over yet."
One of the country's largest miners, Freeport McMoRan Copper
& Gold inc, which recently said it would cut production
amid uncertainty over the new regulations, said on Wednesday it
still hoped to negotiate a reprieve. "We are still in talks with
government. No result yet," Freeport's local CEO, Rozik Sutjipto
Earlier the Indonesian Mining Association (IMA) warned it
could take legal action against the government over uncertainty
surrounding the policy.
IMA deputy chairman Tony Wenas said the mineral export tax
threatened to kill the industry.
"Companies might be shut down, because what we've produced
of course should be sold, and if we have to pay an export tax of
20 to 25 percent, we lose our profit," Wenas said.
(Additional reporting by Wilda Asmarini, Yayat Supriatna and
Michael Taylor; Editing by Stephen Powell)