The prohibition to export
raw mineral products to be effective per 2014 was hard to realize as
processing industry at home was still at minimum. The Ministry of Industry M.S.
Hidayat it was estimated that mineral smelters at home were not ready to operate
by 2014. The Government sets target that 70% of smelters could be built in 2
years. Today 50% of smelters were running and some investors were investing
their capital.
Moratorium of export of raw
mineral products, according to the Minerba law was not easy to exercise as
exporters had been doing it for decades. So it needs a long process to make the
Law fully effective as targeted by the Government.
The Minerba Law had its
positive impact and added value on the domestic industry. Building of smelters
needed enormous capital and the Government was calling out all stakeholders to
invest their capital in this sector. The main hindrance to smelter building was
power supply. So the Government was considering the proposal that investors
built their own power plants for smelters,
Previously it was disclosed
that there were already 153 investors who were interested to invest in smelter
building in Indonesia. They came from China, Hong Kong, Singapore and South
Korea. It was reported that the Government of Japan expressed their grievances
over prohibition of raw mining materials by the Indonesian Government as their
processing industry was running short of raw materials.
The Government wished that
Japanese mineral processing industry relocated their smelters to Indonesia
whereby to put added value to the minery products. But it was presumable that
Japan would not dare to bring .this case to WTO. So it was time to, relocate their
investment to Indonesia. For example Singapore would collaborate with the
Provincial Government of South Sumatra to build smelters in South Sumatra at
the value of USD 400 million. The point was that national companies must stop
importing raw materials in large scale whereby it was regulated by Presidential
Decree that downstreaming of mineral industry be managed by the Ministry of
industry.
However the Ministry of
industry would still collaborate with the Ministry of Energy and Mineral
Resources who had command over the raw materials. As reported, applications to
build smelters kept increasing, including by join venture companies. Application
for permit to build smelters was one or the pre requirements for holders of
mining permits [IUP] to obtain export permit [SPE] from the Ministry of Trade
to export raw ore materials.
Today there were already 36
IUP permit holders being given SPE export permit by the Ministry of Trade.
Previously the companies already had recommendation of the Ministry of ESDM as
they had already passed clear and clean test which included many aspects such
as research procedure, exploration and exploitation, having exercised
technical feasibility test and had fulfilled economic and environmental
requirements and administrative obligations i.e. paying financial obligations
to the Government.
Meanwhile to fulfill
electricity need for smelters PT PLN and KADIN Indonesia had signed MoU to
build powerhouses of 1,500 megawatt. The collaboration was on business to
business basis. The 1,500 MW electricity would be sufficient to support 30 - 40
smelters in all of Indonesia.
So far the survey outcome
of the Indonesia Resources Mineral [IRESSJ mentioned that the downstreaming of
mineral industry would promote investment growth to the amount of Rp 400
trillion. According to IRESS the downstreaming policy made investors set forth
185 proposal at the value of USD 25.5 billion or Rp300 trillion. Therefore the
Government, House and the public must support this down-streaming concept and
the Minerba law to be consistently run.
The beginning of
downstreaming caused lessened tax and royalty in the next 3 years at the value
of Rp60 trillion - Rp100 trillion, but the shortage was small compared to the
benefit of downstreaming. State's income would soar high in the next 3 years.
If this downstreaming process was postponed, Indonesia would be losing added
value to the amount of Rp 268 billion from 2017 to 2023.
Export of raw ore materials
carried out so far made national industry support to be clumsy. Besides
Indonesia would be losing added value in vast amount and become a dependent
nation. Export of raw mining materials had happened in 2008 - 2011. Export of
bauxite ores came to 40 million tons, iron ores 13 million tons, nickel 33 million
tons and copper 14 million tons.
While 80% of the iron and
steel scrap imports Indonesia is still in control, import 500 thousand tons per
year of raw materials alumina, and copper product imports 1.28 billion dollars
in the same period. Through downstream mineral policy, the domestic industry
had a chance to catch up. Because the policy will complement the downstream
supply chain husbandry national industry has a strong structure of the metal
industry. The completeness of accelerating the process of industrialization.
With calculation as above,
then the downstream and coal policy is appropriate because it has both the
intent and purpose to sustain the national economy in the long run. Thus the
debate about the construction of the smelter from any viewpoint becomes no
longer valid and it is time to end. Better business operators for the sake of
long-term thinking rather than short term. (SS)
Business New - April 14, 2014
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