3 Min Read
* Around $500 million of mineral exports have ground to a halt
* Investors concerned over impact on Indonesia's deficit
* Three smelters likely to be completed this year
By Fergus Jensen
NUSA DUA, Indonesia, Feb 17 (Reuters) - Indonesia does not expect to approve any export permits for mineral concentrates until next month at the earliest, a senior government official said on Monday, keeping one of the world's biggest mining industries at a standstill.
Around $500 million worth of copper concentrate, nickel ore, iron ore, bauxite and other mineral exports have ground to a halt due to confusion over the implementation of Indonesia's controversial mineral export ban on Jan. 12.
There are concerns a prolonged halt in mineral ore and concentrate exports could cause the current account deficit to blow out again, after narrowing to 1.98 percent of gross domestic product in the fourth quarter.
The G20 economy is among the most vulnerable to the risk of outflows due to its current account deficit, which hit a record of 4.4 percent of GDP in the second quarter of 2013.
"Hopefully this March we will be ready to issue export recommendations," Hersonyo Prio Wibowo, deputy director for mineral production supervision said in a text message. "Six companies have now applied for recommendation letters."
In order to export, mineral exporters must first receive a recommendation letter from the mines ministry, and then apply to the trade ministry to become a registered exporter.
President Susilo Bambang Yudhoyono last month imposed the new mining rules, including the mining ban and progressive export taxes on concentrates, aimed at forcing miners to build smelters and process their raw materials in Indonesia.
Freeport McMoRan Copper & Gold and fellow miner Newmont Mining, which together account for virtually all copper mining in Indonesia and have been locked in talks with the government over the implementation of the export tax.
Wibowo said the government would not approve export permits until after it completes its review of data on planned smelters.
The Investment Coordinating Board expects three smelters to be completed this year, one chemical-grade alumina smelter and two sponge-iron producing facilities.