Mineral Export Relaxation Threatens Local Smelters, Companies Say

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  • Peleburan Nikel di Sorowako, Sulawesi Selatan. REUTERS/Yusuf Ahmad

    Peleburan Nikel di Sorowako, Sulawesi Selatan. REUTERS/Yusuf Ahmad

    TEMPO.CO, Jakarta - The Indonesian Processing and Refinement Companies Association, which that consists of 21 companies owning smelters with a total investment value of around US$30 billion, urged the government to cancel raw mineral export relaxation.

    Jonatan Handojo, business development officer of Growth Steel Group, parent company of PT Indoferro, said that bauxite and nickel exports relaxation can crush Indonesia's smelter industry.

    "Production activities in many smelters have been hampered due to the difficulty to gain raw materials from mining business permit holders. Many smelters in Indonesia have no mine because they only receive industrial permit (IUI). So, if raw mineral export is [allowed], smelter companies will collapse," Jonatan said.

    According to Jonatan, allowing raw mineral export to gain foreign exchange and stabilize the Rupiah exchange rate against the US Dollar will destroy downstreaming programs and ruin Indonesia's credibility in the eyes of foreign investors because several smelters in Indonesia were built based on cooperation with foreign partners, such as South Korea, Middle Eastern countries, and China. Therefore, smelter companies urge the government to comply with Law No. 4/2009 on Mineral and Coal Mining and Law No.3/2014 on Industry.

    Smelter companies also ask the government to amend Government Regulation No.17/1986 on Industrial Authority, Management and Development, which implements Law No. 5/1984 on Industry that has been revoked and replaced with Law No. 3/2014.