Indonesia’s Cabinet to Discuss Ore Ban Amid Freeport QueriesYoga Rusmana and Eko Listiyorini
Indonesia is drawing up a government regulation that will lay out details of how a planned ban on mineral-ore shipments will be implemented next month, with the cabinet scheduled to review the issue later this week.
The rules, including the treatment of Freeport-McMoRan Copper & Gold Inc.’s local operations, are still being prepared, Coordinating Minister for the Economy Hatta Rajasa told reporters in Jakarta after ministers met to discuss how the curb will work in practice. The cabinet will discuss the matter on Thursday, according to Industry Minister M.S. Hidayat, who attended today’s gathering with Rajasa, Finance Minister Chatib Basri and Energy and Mineral Resources Minister Jero Wacik.
The world’s largest mined nickel producer wants to boost value of commodities shipments by promoting domestic processing and will ban exports of mineral ores after Jan. 12. While the curb was endorsed without concessions by parliament earlier this month, spurring a rally in metals prices, companies including Freeport are seeking clarity about its precise implementation. The Indonesian Chamber of Commerce and Industry said as many as 800,000 jobs may be at risk from the ban.
“Details on implementation are still being prepared, it will be in the form of a government regulation, that’s still being discussed,” Rajasa said. “The government will follow the Mining Law about domestic processing. That’s the most important part of the law that on Jan. 12, 2014 will be imposed.”
Three-month nickel declined 0.1 percent to $14,010 a metric ton on the London Metal Exchange at 1 p.m. in London. The price rallied to $14,227 on Dec. 12, the highest level since Nov. 6. Nickel offers the best opportunity among base metals for gains in early 2014 as Indonesia halts exports, according to Barclays Plc, backing this year’s worst performer.
Freeport-McMoRan, owner of the Grasberg mine in Papua, said last week that it intends to abide by the terms of its contract of work, which allows it to operate the copper and gold mine and export metal concentrate. Still, Bachrul Chairi, director general of foreign trade at the Trade Ministry, said in a text message last week that the prohibition applied to all companies, including Freeport, and concentrates may not be shipped.
“We intend to honor and abide by our contract of work, which allows the company to export concentrates and to promote economically feasible downstream investments,” Phoenix-based Freeport said in the Dec. 12 statement. The company ships the material under long-term agreements to international smelters and “will continue to honor these contracts,” it said.
Indonesia produced 460,000 tons of nickel from mines in 2012, accounting for 21 percent of global mined supply, according Bloomberg calculations based on data from the International Nickel Study Group. Southeast Asia’s largest economy also produces bauxite, copper and iron ore.
The lower house of representatives, the government and mining entrepreneurs need to find a solution on the impact from the planned curb, according to Natsir Mansyur, a deputy chairman at the Indonesian Chamber of Commerce and Industry. The curb may also affect communities near mines, he said yesterday.