By Yayat Supriatna and Fergus Jensen
JAKARTA Nov 5 Indonesia's supreme court has
upheld a challenge to a government ban on the export of
unprocessed minerals, a decision that could pave the way for a
resumption of exports by junior miners who have been hit hard by
the restriction imposed in May.
The verdict effectively annulled parts of new mining
regulations introduced on May 6, said the Indonesian Nickel
Association (ANI) and the Chamber of Commerce and Industry
(Kadin), which showed Reuters a copy of the ruling on Monday.
Trade Minister Gita Wirjawan said he was looking into the
issue, a comment echoed by Susyanto, head of the legal bureau at
the Ministry of Energy and Minerals.
"We will seek information on the Supreme Court verdict as
quickly as possible. After that the government will study the
decision and take steps," Susyanto told Reuters. There was no
immediate comment from the court on a decision the government
The ruling is likely to prompt further uncertainty in a $93
billion sector reeling from a series of regulatory changes this
year, although it is unclear whether it will lead to an
immediate increase in exports.
Analysts said it represents a setback for the government of
President Susilo Bambang Yudhoyono, which instituted the rules
to increase revenue, conserve resources for domestic needs and
boost the downstream mining sector.
Mining constitutes 12 percent of GDP of Indonesia, which is
already the largest economy in Southeast Asia and seeks to
become a global top 10 economy by 2025.
Indonesia is the world's largest exporter of refined tin and
nickel ore and a significant exporter of iron ore and bauxite.
The rules do not apply to big players such as Freeport McMoRan
Copper & Gold and Newmont Mining Corp, which,
along with coal, are not covered by this part of the
The rules aimed to push miners into processing raw ores
domestically to export higher-value finished metals, but mining
executives said they hurt the sector at a time when commodity
prices and investment faced pressure due to a global slowdown.
ANI and the Association of Indonesian City and Regional
governments (Apkasi) brought the case in which they asked the
government to drop four chapters of the regulations.
"The supreme court agreed with some parts of our case and
has ordered the central government to drop four chapters of the
regulation, including chapter 21 on the mineral export ban," ANI
chairman Shelby Ihsan Saleh said.
Shelby told Reuters he was referring to Energy and Mineral
Resources Ministry Regulation no. 7 on mineral processing.
The supreme court verdict was published on Sept. 12, an ANI
One of the four chapters to be removed banned miners from
exporting raw minerals. This was revised with a clause that
allowed ore exports if miners complied with rules on downstream
processing, duties and adhered to good mining practices.
"With the supreme court decision all the chapters (of the
ban) have to be dropped as soon as possible and mineral exports
will be regulated by the Trade Ministry," Natsir Mansyur, a
senior official at the chamber of commerce, told Reuters.
"The Energy and Mineral Resource ministry has no right any
more to regulate exports, including determining the mineral
export quota," Mansyur added.
The regulations sent exports of nickel and other minerals
soaring ahead of the ban and then plummeting when it was
In one example, Indonesia's total iron ore exports climbed
24 percent to 1,912,220 tonnes in April, and then dropped 80
percent to 371,468 tonnes in May.
It hit exporters who operate with government-issued mining
permits hard, especially small scale producers in areas such as
the island of Sulawesi.
The case is linked to a separate Constitutional Court
challenge to regional autonomy over mining, and any government
decision on the matter would have to wait until this was
resolved, Susyanto said.
"What is being challenged at the Constitutional Court is a
law. That has a higher legal standing," he said.
Kadin, which has been tasked by the government to assist
miners in adapting to its rules, said it was asking the Trade
Ministry for help drafting new mineral export rules.
"This is certainly a major embarrassment for the government
which has actually seen a lot of interest in the establishment
of processing plants in the country as a result of the threat to
stop exports," said Keith Loveard, head of risk analysis at
Jakarta-based Concord Consulting.
"The government is now going to have to persuade investors
to go ahead with plans for processing plants even though the
threat of an export ban has been removed," he said.