Oil and Gas

Indonesian lawmakers hope to revise mining law by September

* Revised law may include easing of export curbs on minerals

* May push back Jan 2017 ban on concentrates by two years

* Some say changing regulations will spark legal uncertainty

JAKARTA, Feb 29 (Reuters) - Indonesian lawmakers hope to revise the country’s resource rules by September in a move that could include easing of export curbs on minerals, such as nickel and copper, giving Freeport McMoRan Inc and other miners time and money to build smelters.

A parliamentary commission is discussing possible revisions to a 2014 law - which banned exports of nickel, bauxite and copper ores and set a three-year limit on concentrates sales to force firms to build smelters but instead ended up costing Indonesia billions of dollars in lost revenue.

“If they are not allowed to export, the economy could be destroyed,” Kurtubi, a member of the commission responsible for drafting the proposed revisions, told Reuters.

Mining accounted for almost 6 percent of Indonesia’s GDP before the ban, but has since slipped to about 4 percent.

Mining companies, mainly nickel producers, should be allowed to resume some ore and bauxite exports so they can earn revenue and complete their smelter projects, said Kurtubi and one other commission member.

At least 32 smelter projects have been delayed or cancelled, mostly nickel, government officials said, due to a prolonged slump in prices of the metal that are mired near their lowest since 2003. Only five nickel smelters, of a targeted 12, were completed last year.

State-owned miner PT Aneka Tambang Tbk, which has been hit hard by the ban given it gets about 40 percent of its earnings from raw material sales, said it was seeking permission to resume some nickel ore shipments.

Mulyadi, the commission’s deputy chairman, said if nickel firms had “progressed 60 percent of the way in their smelter project ... we should discuss whether there should be a relaxation of the law for that specific company”.

But any easing of curbs by the world’s former top nickel ore exporting nation and major bauxite and copper producer could pressure already battered global commodity prices.


The aim of Indonesia’s export curbs was to shift its sales from raw materials to higher-value finished metals. But smelters have failed to materialise as low commodity prices made them economically unviable.

Kurtubi said the mining law revisions could include pushing back the January 2017 ban on concentrates by two years to give Freeport and Newmont Mining Corp, Indonesia’s top two copper producers, more time to build a $2-billion smelter.

The U.S. miners have made initial financial commitments to build the smelter, but construction has not yet commenced.

Critics, however, say changing the law could spark legal uncertainty and scare off investors.

“We have seen the fact that some cannot provide (smelters) as required but it doesn’t mean we have to change regulations to follow them,” said Fadel Muhammad, the commission’s co-chairman.

“If they cannot make it, then goodbye to them. Somebody else can make it,” said Fadel, who expects a new law in “maybe six months from now”. (Additional reporting by Bernadette Christina Munthe, Agustinus Beo Da Costa and Fergus Jensen in Jakarta; Editing by Himani Sarkar)