| JAKARTA, April 17
JAKARTA, April 17 Indonesia appears to be
softening a controversial mining policy amid industry criticism
and legal challenges to rules whose implementation could cost
Southeast Asia's largest economy up to $10 billion a year in
The world's top exporter of thermal coal, refined tin and
nickel ore has pushed to boost exports of finished products and
maximize benefits from a sector home to giants such as Freeport
McMoRan Copper and Gold and Newmont Mining.
Last year Indonesia asked all miners to submit plans to
build refineries or smelters ahead of a January 2014 ban on raw
mineral exports. Until then a 20 percent tax on ore exports has
Deputy Energy and Mineral Resources Minister Susilo Siswo
Utomo said the focus is to add value to exports, and for that
smelters need not necessarily be built.
"The word process does not mean you have to build a smelter.
Sometimes you need to wash, to separate the soil and mud. This
is also processing," Utomo told an Australian mining conference
in Jakarta on Tuesday.
"We also realise that not all minerals can be processed,"
The government hopes construction will have started on at
least 10 smelters by the end of the year when a more concrete
processing policy will be in place, he added.
Utomo's comments come after Energy and Mineral Resources
Minister Jero Wacik was quoted in local media as saying the
rules were "impossible."
"We will see what form it will take, so that the law can be
carried out, but we are not blocking ourselves," Wacik told
reporters last week.
The rules led to layoffs and forced multiple smaller mines
to close as ore shipments came to a standstill, costing the
industry $164 million a month in lost sales of nickel and
Up to $10 billion could be lost annually in exports if the
smelter requirement and the export ban remain in place, said a
senior Jakarta-based analyst with a U.S. mining company, who did
not want to be identified due to the sensitivity of the matter.
Mining exports from Indonesia last year totaled $31.3 billion.
In a joint meeting in Jakarta on Monday, the country's top
mining associations criticized the processing rules. For lead,
zinc and copper, building smelters is not economically viable
because of the size of Indonesia's reserves and the slim
refining margins, the Indonesian Mining Association said.
The policy shift would be good news for companies such as
Freeport and Newmont, which process ore in the form of
concentrate already, but do not smelt all of it locally.
Freeport said last month it remained reluctant to build smelting
operations in Indonesia..
The smelting requirement has also been a sticking point in
their contract renegotiations with the Indonesian government.
"These are interesting and significant developments,"
Australian senior trade commissioner Kym Hewett told Reuters on
the sidelines of the mining conference, referring to the
"Value-adding and processing of minerals mean a lot of
different things. It's not just all smelting and refineries,"
"It remains to be seen where it goes."