COMMENT: Indonesia’s miners came, listened and asked for clarity

If miners in Indonesia are unhappy about the government proposal to ban them from exporting ores, they were careful not to show it too openly at a meeting with senior government officials on Tuesday, February 28.

At the meeting the 200 members of the audience played the role of attentive audience very well – they sat quietly, took notes, and clapped obediently after each speech.

The meeting, in Jakarta, was meant to be a platform to gather feedback from mining communities – the first of several planned initiatives in the next two to three months – regarding the ministerial decree that bans export of unprocessed ores from 2014, which was passed early this month.

But the feedback from the floor was not coming naturally.

The meeting went on without memorable sparks, with the session dominated by sponsored messages from government officials.

“The government has to [pass the law] to raise the national income. The taxes paid from [the] mining sector is too small, compared with the production figures of minerals and metals these few years,” Thamrin Sihite, director general of the ministry department responsible for metals and mineral resources, said in his speech.

Some of the members of the audience were seen nodding.

“The government should not only ban [the] export of unprocessed ores [it ] should stop giving licence to new mining projects that do not have contingency plans on how they will process their ores during application,” another government official added during a question-and-answer session that followed.

The audience clapped.

But silence does not mean consent.

Talking to miners who were present after the meeting showed that a number of them are not completely in agreement with the government’s latest move.

The opposition tone, however, remained gentle and neutral.

“The ban on unprocessed ores will reduce the country’s competitiveness among mining companies in the world,” Martiono Hadianto, president director of copper and gold miner Newmont Nusa Tenggara, said.

“The decision to ban the export of unprocessed ores from May 6 was quite sudden. The government should provide more time for socialisation and adapting miners to the idea,” Agus Suhartono, ceo of nickel miner Ibris Nickel, said.

“Investors will consider [the] investment environment before putting their money into the country. We are afraid that the new laws may put off potential investors to invest in Indonesia,” Peter Wessels, executive officer of the Forum for Exploration and Mineral Development based in Jakarta, said.

To be fair, there are several possible reasons on why miners are still reserving their comments.

Being the first session of feedback gathering, the miners might have been using the opportunity to understand clearly what the Indonesian government was trying to do.

“There is still a lot of confusion on the ground on the various interpretations of the new laws,” a miner told Metal Bulletin.

For mining contract holders affected by the ban on unprocessed ores from 2014, there are still questions about what constitutes ‘processed’ ore, and what happens if there are not enough smelters built to readily accommodate the ores processed in the country.

Then there’s the question of whether the regulation will be enforceable given the short time for preparation.

“The government said that [it] will assess the situation case-by-case. As long as the miners have had plans to process ores in the future, they may be allowed to continue exporting,” the miner said.

“While this is a good sign that the government is ready for discussion, it can also mean uncertainty in the way laws work,” he said.

But uncertainty about the law is the big worry for investors.

There is little doubt the reason for the government to hold Tuesday’s session was to remove any uncertainties the mining community may feel at the moment.

However, the audience may now want to start speaking up and communicate their doubts to the government in future sessions to allow both parties to be perfectly clear on where they stand.

Megawati Wijaya
megawati.wijaya@metalbulletinasia.com