An Indonesian law, passed in 2009, banning mining companies in Indonesia from exporting ore and concentrates was scheduled to take effect January 12, 2014. The law was designed to encourage development of downstream smelting and refining facilities within Indonesia. However, as of now, the nation does not have enough such facilities to process all of its domestically produced ores and concentrates, and if the law is strictly enforced, many miners, large and small, will be forced to cut back production or shut down.
Negative economic impacts will be felt across Indonesia by federal, provincial, and local governments, in the form of lost tax revenues, and by local and regional economies, in the form of lost jobs and economic recession.
The Indonesian Mineral Entrepreneurs Association (Apemindo) predicted in early December that all-out enforcement of the ban would result in the loss of $9.8 billion in export earnings, 3.5 million jobs, and 5 million children forced to stop school. “Workers in mining companies, contractors, suppliers, logistics, as well as those with small businesses around the mining area, all stand to lose their livelihood,” Poltak Sitanggang, Apemindo’s chairman told the Jakarta Globe on December 9. Poltak said economic activity in towns near the mines will cease as power supplies get cut and workers have no more income.
Large international mining companies that would be impacted by the ban include Freeport-McMoran Copper & Gold and Newmont Mining.
As of late December, when this news report was being written, there appeared to be no certainty that the government would, in fact, enforce an all-out export ban. Implementing regulations had not been issued for administration of the ban, and reports in Jakarta newspapers indicated the government was seeking a solution that would allow at least some exports to continue.
Weeks, and perhaps months, may be required before a clear picture emerges as to how Indonesia will actually deal with exports of ore and concentrates in years to come.
