The Energy Ministry’s Director General of Minerals and Coal Bambang Gatot Ariyono said the government has not decided whether to relax the rules on exporting concentrate or continue to ban concentrate exports next year. The government is still discussing this matter, which the House of Representatives (DPR) still needs to approve for inclusion in the revision of the Minerals and Coal Law.
“I can’t say because it is a decision that needs to be made with the government. So let’s just wait for it to be discussed during talks on the bill,” Bambang said. (Read: Luhut: Freeport Permit Recommendation from Sudirman Said)
There is still a possibility that this policy will be relaxed, Bambang continued, because concentrate already has a huge added value before being processed. Therefore, Bambang urged the House to immediately discuss the revision of the Minerals and Coal Law. The bill could include an article about concentrate exports.
Bambang expects the revision to be finished before 2017 by speeding up talks near the end of this year. “The geothermal energy bill will also be finished soon. Yesterday, I was involved in the discussions,” he said. (Read: Freeport Export Permit Still Valid After Removal of Minister Arcandra).
Debate over the relaxation of mineral exports has been sparking clashes for some time now. The National Economic and Industry Committee (KEIN), for instance, rejected the government's plan to ease regulations on mineral and coal export licences. The committee says downstream development, or building refineries and smelters, must be prioritised to created added value to these mining commodities.
KEIN Chair Soetrisno Bachir said that relaxing mining export licences would not encourage the creation of added value to mining products. For this reason, KEIN is recommending that President Joko Widodo reject the plan.
"KEIN is totally against the plan to ease the rules on mineral and coal exports," Sutrisno told Katadata after a media workshop at Bogor's Novotel Hotel on Sunday 14 August.(Read: Government Ensures SOE Will Take Over Freeport).
He said relaxing the rules on mining exports could put a stop to development of the downstream industry. However, he did confirm that an export ban would reduce state revenue from this sector.
But he is confident that in a few years, the mineral and coal industry will be able to increase higher value added exports. "If the goods cost IDR 1,000, and the process costs IDR 1,000, the price could be IDR 10,000 or even IDR 20,000," Soetrisno said.
He argued that Indonesia has been too complacent when it comes to selling large volumes of mining commodities to other countries. This is done when commodity prices are high. However, this policy is has boomeranged now that commodity prices are falling.
This culture of exporting unprocessed commodities has made Indonesia neglectful of developing the downstream sector, which is where huge profits lie. (Read: Customs Exit Still Low from Freeport and Newmont).