Indonesia’s mining industry faces a stark future beginning January as a ban on unprocessed mineral exports takes effect, according to domestic mining association members who say government rules favor unfairly more adaptable international miners.
Effective January 12, the archipelago nation and top exporter of nickel, thermal coal, refined tin and bauxite, will introduce plans forcing miners to build smelters, or sell ore to companies with smelters, with lawmakers seeking a greater share of resource wealth. Amid depressed demand and a widening trade deficit, however, opposition is growing as regional officials also plan their own export rules, adding more uncertainty.
“The national mining industry will die before it develops,” the Indonesian Mineral Entrepreneurs Association said in a statement, quoted by Reuters. Multinational miners, such as Freeport McMoran Copper and Gold and Newmont Mining, operating in Indonesia for decades, the statement added, have an advantage.
To date, bauxite shipments have soared as buyers stockpile ahead of the stoppage, while potential investors, including Russian aluminum titan UC Rusal and Swiss-based commodities and mining giant Glencore Xstrata Plc wait things out. Mining contributes 12% GDP to the largest economy in Southeast Asia and the one in Asia-Pacific to avoid the global recession.