Government plans to relax mineral export ban policy

By Thomas Sembiring

The Ministry of Energy and Mineral Resources plans to relax the current mineral ore export ban policy amid the lingering downturn in commodity prices.

Sujatmiko, Head of Public Communications Center at the ministry, said that the plan has been included in the government?s draft of the revised 2009 Mining Law. ?This is based on the academic draft (of the revised mining law) prepared by the government,? he said.

He did not provide clear reasons as to why the mineral ore export ban policy has to be relaxed, only saying that it has been demanded by the industry players, and the government has to be ?smart in responding to the current changing global market dynamics.?

Sujatmiko added that the House of Representatives, which is also preparing its own academic draft, is likely to support the plan.

The previous government imposed in early 2014 the export ban policy on mineral ores in a bid to generate greater value from the country?s mineral resources by pushing miners to develop domestic smelters. However, export of mineral concentrates are still allowed until 2017, by which time concentrates producers such as PT Freeport Indonesia must already built the required domestic smelter.

PT Freeport has announced plan to build copper smelter in Gresik, East Java, but construction progress to date has been very slow, raising concerns that it may not be able to meet the 2017 deadline. Other miners have also facing difficulties in developing their smelters due to among others to lack of funding.

Minister of Energy and Mineral Resources Sudirman Said has recently acknowledged that some of the planned domestic smelters may not be realized by 2017 as the current commodity downturn has affected financial condition of the miners, thus hampering them to finance the construction of the smelters. The statement has raised speculation that the government is about to relax the export ban policy, a move that may cause some investor to put on hold their investment plans in developing domestic smelters, and frustrate those who have already built the required smelters.

Sudirman has recently said that the revision of the 2009 Mining Law is expected to be completed this year.

Editing by Reiner Simanjuntak