(Corrects GDP impact in 13th para to 0.1 percent from 1
* Controversial ban on exporting unprocessed ore due on
* Government scrambling to pass regulations to limit impact
* Indonesia world's top exporter of nickel ore, refined tin
and thermal coal
By Rieka Rahadiana and Randy Fabi
JAKARTA, Jan 10 Indonesia's government was
scrambling to pass last-minute regulations to limit the impact
of a controversial ban that could halt billions of dollars worth
of unprocessed mineral ore exports from Sunday.
The Southeast Asian nation is the world's biggest exporter
of nickel ore, refined tin and thermal coal and home to the
fifth largest copper mine and top gold mine. Mineral shipments
totalled $10.4 billion in 2012, or around 5 percent of
Indonesia's total exports, according to the World Bank.
The ban aims to boost Indonesia's long-term returns from its
mineral wealth, but officials fear a short-term cut in foreign
revenue could widen the current account deficit, which has
undermined investor confidence and battered the rupiah currency.
Despite having more than five years to prepare for the
mining law, officials just days ahead of the ban were rushing to
try to soften the potential blow of the new policies.
"The government of Indonesia will still implement the mining
law consistently. But we also want to make sure its effect won't
be too troublesome and lead to the laying off of workers," said
Susilo Siswoutomo, vice minister of the energy and mines
Mining companies, such as Freeport McMoRan Copper & Gold
, have been ramping up shipments ahead of Sunday's
deadline, uncertain whether they will be able to continue after
"We are still on to ship through January 11. Obviously, the
only thing we will try is to maximize our shipments," said Daisy
Primayanti, spokeswoman for Freeport Indonesia.
The mining ministry has approved regulations that would
allow Freeport, Newmont Mining Corp and others to
continue to ship copper, manganese, lead, zinc and iron ore
concentrate until 2017.
But nickel ore and bauxite exports worth more than $2
billion annually would still be banned from Sunday, while coal
and tin shipments would not be affected.
"We have been preparing two trade ministerial regulations on
the ore export ban -- one is about the procedure for processed
and refined ore exports and the other one is about the ore
export ban itself," said Bachrul Chairi, director general of
foreign trade at the trade ministry.
The regulations could still be tweaked and must be approved
by President Susilo Bambang Yudhoyono, who is facing one of his
biggest economic policy decisions in his nearly 10 years in
Even if the president approves the changes, Southeast Asia's
largest economy will still take a financial hit.
Finance Minister Chatib Basri told reporters the proposed
regulation would still cut government revenue by as much as 10
trillion rupiah ($820.34 million) this year due to lost royalty
payments and export taxes. That translates to around 0.1 percent
of gross domestic product.
The central bank also said there would be an economic impact
but that the ban would pay dividends in the long run.
"We will keep a close eye on how it develops and will
discuss its impact on Indonesia's economy," Agus Martowardojo
told reporters on Thursday shortly after announcing the central
bank would keep its benchmark interest rate unchanged at 7.50
Any major economic impact could make the ban a hot political
issue in this year's legislative and presidential elections,
especially if it sparks a wave of layoffs throughout the world's
fourth most populous country.
Thousands of mine workers have already been laid off as more
than 100 junior miners halt operations ahead of the ban.
Freeport, the country's dominant copper producer with 73
percent market share, last month warned an unrevised ban would
cut output at its Grasberg mine by 60 percent and lead to
layoffs of half of its 15,000 Indonesia employees.
($1 = 12,190 rupiah)
(Additional reporting by Michael Taylor, Yayat Supriatna, Wilda
Asmarini and Nilufar Rizki in Jakarta; Editing by Tom Hogue and