* Govt to continue talks with parliament
* Freeport, Newmont warn ban could stop operations
* Govt has power to create loophole, says mining assoc
JAKARTA, Dec 9 Indonesia's government is still
seeking a way around a mineral ore export ban that the country's
parliament insists remains in place, chief economic minister
Hatta Rajasa said on Monday, as mining investors held out for a
The ban, which comes into effect next month, is designed to
increase the value of the country's mineral exports. Indonesia,
the world's top exporter of nickel ore, thermal coal and refined
tin, has for decades and with limited success tried to create
more value from its vast array of natural resources and hopes to
develop processing industries to support its growing economy.
But a shortage of smelters in place threatens to cut output
from mining companies in Indonesia such as Freeport-McMoRan
Copper & Gold Inc. and Newmont Mining Corp
unless they find a way to meet or adjust the minimum processing
"We are trying to find a way, to find a solution. But that
doesn't mean we are going to break the law ... We are going to
talk again to parliament," Rajasa told reporters.
Freeport, the country's top exporter of copper and a major
source of export revenue, is also seeking a way around the ban
that could see its production cut by 60 percent or force it to
stop operations completely.
Newmont, which currently smelts less than a quarter of its
ore domestically, has also warned it may have to halt operations
at its Batu Hijau mine, which it operates in partnership with
Japan's Sumitomo Corp.
The ore export ban has come at an unwelcome time for the
government, as Indonesia scrambles to cut a large current
account deficit that has been undermining confidence in its
currency, Asia's weakest this year after falling around 20
percent to the dollar.
Any cut in exports will only mean a bigger deficit. The
authorities have been deliberately slowing growth in an attempt
to cut imports and the current account deficit.
Late last week, lawmakers rejected a government bid to water
down the ban by allowing mining companies to export unprocessed
ore if they were able to show they were building smelters or
were prepared to pay higher export taxes.
A complete ban would cost Indonesia billions in lost revenue
from the mining sector, according to the Indonesian Mining
"Thousands of workers will be left unemployed ... I think
the only ones who will survive will be Vale Indonesia
and partly Antam," said IMA vice chairman Tony Wenas,
referring to two companies that posses smelting facilities.
However, there is still room for the government to manoeuvre
around parliament and the export ban, Wenas said, by adjusting
its regulation that determines minimum purity thresholds for
"The law only states that companies must process and refine
their products domestically," Wenas told Reuters, pointing to a
discrepancy between the minimum processing threshold for copper
(99.9 percent) and nickel pig iron (6 percent) set out in a
"To change the law, of course it's up to the parliament, but
to change a regulation or a ministerial decree is the authority
of the government," Wenas said.
Earlier, the Indonesian Mineral Entrepreneurs Association
said it was also against the ban, which it said would destroy
the domestic mining industry by cutting into profit margins.
The association said the law favours big international
mining firms like Freeport-McMoran Copper & Gold Inc and
Newmont Mining Corp that could afford to build smelters.