Indonesia May Review its Ban on the Export of Unprocessed Minerals
Indonesia's state news agency Antara reported that the government may review its Mining Law No.4/2009 which stipulates a ban on the export of raw minerals. This controversial new law, through which the government aims to raise more value-added revenues, caused a shockwave across Indonesia's mining sector because a significant amount of mineral exports constitute unprocessed ones. The law, which is set to be implemented on 12 January 2014, implies that minerals need to be processed domestically first before exports are allowed.
As a consequence of the 2009 Mining Law, mining companies need to construct smelters to process the raw minerals as there is currently not enough smelting capacity in the country. Many mining companies have objected to the new law as it is not in line with previous contracts and does not give the companies enough time to adjust to the new situation. It is also expected that during the first two or three years, the government will lose out on revenue (amounting to USD $4 billion per year) due to a sharp decline in exports, while also leading to increased unemployment in Southeast Asia's largest economy.
Antara reported that Indonesian President Susilo Bambang Yudhoyono invited former Justice Minister Yusril Ihza Mahendra to inform concerned offices about ways to overcome this situation. "Hopefully, the situation can be overcome by relaxing the regulation a bit, so that bigger losses can be avoided for the country, in terms of state income as well as companies' income." said Mahendra. However, he also stated that plans for smelting plants, which are currently being built or being planned to be build, should be continued.
Further Reading:
• Go-Ahead for Indonesia's Controversial Ban on Unprocessed Mineral Exports
• Indonesia Studying Temporary Exemption for Export of Raw Minerals
• Export Ban on Unprocessed Minerals Temporarily Pressures Trade Balance