(Recasts, adds quotes)
By Fergus Jensen and Wilda Asmarini
JAKARTA Jan 7 Indonesia's planned mineral
export ban - a policy designed to force miners to process their
ores domestically - is sending shudders through the economy,
with a Singapore-owned nickel miner suspending operations ahead
of the Jan. 12 ban.
Indonesia is the world's top exporter of nickel ore, thermal
coal and refined tin, but also has significant exports of iron
ore and bauxite, both of which are likely to be stopped after
An increase in shipments of processed minerals would bolster
the country's foreign revenue and help narrow a current account
deficit, which has undermined investor confidence and battered
However, the move has drawn protests from small mining
companies, which say they can't afford to build smelters, as
well as from international majors, including U.S. giants
Freeport-McMoRan Copper & Gold and Newmont Mining Corp
The plan has also raised fears that export earnings could be
slashed in the short term as miners scramble to meet the new
regulation. Mining contributes about 12 percent of gross
domestic product to Southeast Asia's largest economy.
Privately owned Ibris Nickel Pte Ltd is the first miner to
announce it has put operations on hold due to uncertainty over
the ban, halting its 2-million-tonne-a-year mine.
Ibris Chief Operating Officer Agus Suhartono told Reuters
the company had halted operations at the start of the month and
may be forced to lay off some of its 1,400 workers at its mine
in Southeast Sulawesi. Ibris does not have a refinery yet, and
currently exports all of its nickel ore production.
"Workers have already stopped working because there is
nothing they can do," Suhartono said.
The miner, which is part of the Ibris Group, announced plans
in June to build a $1.8 billion nickel pig iron plant.
Uncertainty over the requirements of the law has added to
miners' concerns and delayed smelting plans, given varying
interpretations from government officials and Indonesia's
history of backing away from controversial policies.
President Susilo Bambang Yudhoyono's administration is
working on a special regulation that will likely ease the export
restrictions on companies already processing some ore
domestically, although moves to water down the ban have been
opposed by the country's parliament.
The Indonesian Mining Association said it was told by the
government the new regulation would exempt Freeport and Newmont
from the ban, but maintain the restrictions on hundreds of other
miners that do not process any of their ore domestically.
Freeport and Newmont, which refine only about a third of
their copper output in Indonesia, account for 97 percent of the
country's copper production.
Officials with the energy and mining ministry declined to
comment on the pending regulation, which is expected to be
announced before Sunday's ban.
At least one company remains adamant that it will continue
to export its unprocessed minerals whether or not it receives an
"I will have a lawyer standing by at my mine. We will
continue to load ships," Wira Budiman, marketing director for
nickel miner Mobi Jaya Persada, told reporters.
"If customs officials or police come they can talk with our
lawyer. If they can show us the law in black and white we'll
Budiman said he planned to ship around 1.8 million tonnes of
nickel ore this year.
The ore export ban has come into effect at an unwelcome time
for the government, as Indonesia scrambles to cut a large
account deficit that has been undermining confidence in its
currency, which was Asia's weakest last year after falling more
than 20 percent to the dollar.
Any cut in exports will only mean a bigger deficit.
Indonesia's central bank said on Friday the current account
deficit could exceed 3 percent of GDP due to the risks from
lower commodity prices and the mineral export ban.
Southeast Asia's largest economy reported a current account
deficit of 3.8 percent in the third quarter of 2013, easing from
a record high of 4.4 percent the previous quarter.
The mineral export ban is part of a 2009 mining law that
aimed to increase the export value of Indonesia's commodities.
Under the ban, the government estimates processed minerals
will boost foreign revenue from metals to $25 billion in 2016
from $11 billion last year, said Sukhyar, director general of
coal and minerals.
However, a recent World Bank report suggests that an
optimistic view of the export ban would result in "a
significant, negative shock to Indonesia's trade balance of
around $6 billion in 2014. [IDn:nL3N0JY2DU]
(Additional reporting by Yayat Supriatna and Andjarsari
Paramaditha in Jakarta; Writing by Randy Fabi; Editing by