- POSTED: 10 Jan 2014 23:42
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Indonesian government officials are scrambling to pass regulations to ease a ban on unprocessed mineral ore exports, which begins on Sunday.
JAKARTA: Indonesian government officials are scrambling to pass regulations to ease a ban on unprocessed mineral ore exports, which begins on Sunday.
While the ban aims to boost Indonesia's long-term returns from its mineral wealth, it will hurt efforts to narrow the nation's current account deficit and cause thousands to be laid off in the short term.
Over 1,000 labor activists and employees of mining companies gathered on Thursday to protest in front of the Ministry of Energy and Mineral Resources in Jakarta.
They fear a looming mineral ore export ban will cost them their jobs.
The chairman of the Indonesian Mineral Entrepreneurs Association said they have laid off 30,000 workers before the ban has even taken effect.
The Indonesian Chamber of Commerce and Industry said as many as 800,000 jobs may be at risk from the ban including mining contractors.
Agus Suhartono, deputy chairman of the Indonesian Mineral Entrepreneurs Association, said: "Contractors that have practically invested machinery will no longer be able to use them. The collapse of contractors' businesses, which mostly have work leases, will result in the increase of non-performing loans at banks."
A proposed regulation from the Ministry of Energy and Mineral Resources will allow exports of some mineral ore concentrates to continue till 2017, but small mining companies said the proposal won't help them.
Representatives of Mineral Entrepreneurs gathered recently to give input to a government envoy on the impact it would have on their businesses and possible solutions.
I D Susantyo, representative of Indonesian Nickel Miners Association, said: "Temporary solution? I don't see a viable way out because it takes 2.5 to 5 years to build a smelter. So we can't send home employees for too long. Companies can still hold on for 3 to 6 months but not more than that, especially if they are small mining companies."
Indonesia hopes to generate greater revenue from its resources by pushing the mining industry to develop downstream processing industries.
The government estimates processed minerals will boost foreign revenue from metals to US$25 billion in 2016 from US$11 billion last year.
However, low commodity prices, a lack of infrastructure and poor coordination within the related sectors raise concerns the ban will cause major losses before benefits can be felt.
Trade Ministry director general for foreign trade Bachrul Chairi said the ban would cause losses of over US$7 billion from ore exports in 2015.
The Association of Mineral Entrepreneurs said it is not opposed to the long-term gains of the Mining Law but it is against how it is implemented.
So far, it filed a class action lawsuit against the government, a judicial review of the Mining Law with the Constitutional Court, and filed an appeal against the Number 23 government regulation to the Supreme Court.