so is our govt. going to scrap the plan....hope so....please read...
Mining firms may not meet government deadlines
The Jakarta Post | Headlines | Mon, August 06 2012, 8:00 AM
Paper Edition | Page: 3
The government must acknowledge that it is unrealistic for most mining firms in Indonesia to build smelting plants with only two years remaining before the ban on the export of unprocessed ore fully takes effect, a mining association says.
The ban, stipulated in the 2009 Mineral and Coal Law and an Energy and Mineral Resources Ministry regulation issued in May, will be effective in 2014, as mining companies operating in Indonesia will have to process or refine their ores in Indonesia, either by building their own smelting plants or by joining forces with other mining companies to build a smelter to be used together.
It is unlikely, however, that all mining companies will have their smelting plants ready before the deadline, as building a smelting plant and the necessary support infrastructure will take at least four to five years to complete, said Herman Afif Kusumo, chairman of the Indonesia Mining Society (MPI).
“If the government insisted [on commencing the law in 2014], then many mining companies would fail to comply with the law,” Herman said recently. “With such conditions, the government must therefore revise the law and make it more flexible. For example, the [new] law should have an extended deadline,” he said.
Mining giants in Indonesia have expressed their complaints that building new smelting plants require an excessive capital outlay and thus it is not financially viable.
“PT NNT [Newmont Nusa Tenggara] has always complied with the Contract-of-Work and other laws. With the current condition, however, it is not feasible for PT NNT to build its own smelting plants,” NNT’s spokesman Rubi Purnomo told The Jakarta Post.
NNT, a local unit of US mining giant Newmont Mining Corporation, operates the Batu Hijau gold and copper mine in West Nusa Tenggara and is one of the biggest players in the country’s mining business.
The presence of a smelting plants, many mining stakeholders also argued, would also need to be supported by necessary infrastructure that is hardly available outside Java.
“If we want to build a smelting plant in Papua, there must be a source of electricity, roads, ports and a waste dumping facility nearby,” said Rozik B. Soetjipto, the president director of PT Freeport Indonesia.
Benny Marbun, head of the commercial division at state-run utility company PLN, said a mining company wanting to build a smelting plant outside Java would need a new power plant running at 100 megawatt capacity, which would cost at least US$16 million to build and take at least two years to complete.
Realizing such constraints, the government has tried to lure investors to invest in power plants.
Previously, the government had also dismissed concerns that many mining companies would not be able to comply with the law by 2014, maintaining its stance that the law was necessary for resource-rich Indonesia to climb up the supply chain and maximize state benefits by producing value-added goods.
More than 100 mining companies have already submitted proposals to build smelters for the government, according to Thamrin Sihite, the director general for minerals and coal at the Energy and Mineral Resources Ministry. (sat)
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