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PrintThe Indonesian Chamber of Commerce and Industry is calling on the government to send a clear and consistent signal on whether it plans to fully implement the export ban on raw mineral commodities slated to take effect in January next year.
The trade group, known as Kadin, says the ban has merits and it will aid the government’s efforts to spur investment that pushes Indonesia’s industries further up the value-added chain.
Kadin’s demand for the government to deliver a clear and consistent message to markets would seem to be confounded by the group’s simultaneous call for regulators to only partly implement the ban.
Kadin deputy chairman Didiek Suwondho said on Tuesday that a partial ban would drive up prices of mining commodities, making investment in processing facilities, such as smelters and refineries, more attractive.
On Sept. 28, senior energy and mineral resources ministry official Thamrin Sihite said the export restrictions would be suspended for firms that committed to building smelters.
Indonesia is the world’s largest nickel producer and the largest exporter of tin. It also has significant reserves of bauxite. The archipelago is further home to the world’s second-largest copper mine.
Didiek said the current prices of several commodities — bauxite for instance — are so low that it makes investment in domestic processing economically unfeasible.
“But a ban on exporting raw mining commodities will certainly drive prices up, and foreign investors will realize that if such a scenario occurs, they would have to invest in a processing facility,” he added.
“Even confirmation by the government that it would go ahead with the ban made the prices of mining commodities more stable,” Didiek said.
Kadin deputy chairman Garibaldi Tohir said a total export ban would lead to the collapse of Indonesia’s mining industry.
He said investors are demanding that the government delivers a firm and clear signal on whether it would go ahead with the export ban.
“The deputy minister had told us that the export ban is still on the table, but special attention would be provided to those who have shown serious commitment,” Garibaldi added.
He said Kadin supports the value-added push and understands that the government has little room for maneuver as it is related with the implementation of the 2009 Mining Law. “But a middle ground must be found,” he added.
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