The Jakarta Post reported that, mining companies are showing a low level of enthusiasm to enter the downstream industries, as required by the 2009 Minerals and Coal Law, due to lack of incentive and unclear government policies, the Association of Indonesian Mining Professionals says.

The law stipulates that all mining companies are obliged to process their mining products in the country by no later than 2014. The law aims to promote the added value of the mining operations to the country’s economy.

Mining association chairman Irwandy Arif told The Jakarta Post that without attractive incentives, he was pessimistic that the companies would seriously comply with the law, moreover, the punishment for infringement was only administrative.

“Currently, only a company or two have seriously prepared to enter the downstream industries,” he said on the sidelines of the 4th Added Value Mining Indonesia Conference, Workshop and Exhibition at Ritz-Carlton Hotel in Jakarta on Thursday. He added that several companies had developed research or pilot projects to produce derivative products of their commodities, but claimed that none were ready to develop the products on an industrial scale.

Irwandy urged the government to create clearer guidelines and policies for companies to develop the downstream industries.

He said that a working group from his association was currently assisting the Energy and Mineral Resources Ministry in deliberating a new ministerial decree on detail rules and strategies to develop mining downstream industries.

“The draft will contain explanations on mechanisms on how mining companies should process their products,” he said. He took the example of the nickel commodity that he proposed had to be processed minimally into ferro or matte nickel.

Director General of Manufacturing Industry Base (BIM) for the Industry Ministry Panggah Susanto said that another factor hindering the development of the mining downstream industries was the uncertain supply of raw materials due to the country’s upstream industries low capacity as many mining companies exported their mineral production.

“Our industries [including mining] depend heavily on imported raw materials,” he said. He added that the government was seeking the best way to develop the capacity of upstream industries in supplying raw materials for downstream ones.

Beside the raw materials, energy supply, particularly electricity and gas, also became one decisive factor as to why investors and companies were reluctant to engage in mining downstream industries.

To tackle this problem, the government is now promoting the public-private partnership scheme to accelerate the development of infrastructure by focusing on energy and transportation sectors.

Panggah said the development of the mining downstream industries was vital to increase the country’s product competitiveness. He emphasized that in the current free-trade era, the country had to consistently improve the value and quality of its products to compete with more advance industrialized countries.

“We’re committed to supporting the development of the downstream industries by facilitating all proposal of incentives, developing human resource quality and promoting investments,” he emphasized. (rdf)
Source : The Jakarta Post