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Tuesday, 02 November 10
ADDED VALUE REMAINS STAGNANT - MAJALAH TAMBANG
 The improvement of added value of mining products in accordance with mandate of the mining law has not been visible. Minerals and coal are still exported in the form of raw materials. Added value of Indonesia's mining products remains in the course of pilot project.
As reported by Majalah Tambang, Energy and Mineral Resource Minister Darwin Zahedy Saleh surely knows that the added value of mining products remains unchanged. The spirit rumbling some time ago seems clueless. For the purpose, the economist graduating from Jakarta-based University of Indonesia needs to pump it by affirming again the commitment of the government. “We will boost it (smelter development),” he said after inaugurating a seminar on the Enhancement of Mining Added Value in Jakarta on October 6,2010.
As a concrete measure to support the acceleration, the Ministry of Energy and Mineral Resources plans to issue a ministerial regulation regarding the enhancement of added value of mining products. The ministerial regulation constitutes part of the application of Mining Law Number 4 Year 2009 and Government Regulation Number 23 Year 2010 regarding the Execution of Mineral and Coal Mining Business Activities.
“Hopefully, it would have been issued in November and the draft is being prepared,” he said.
In addition, he would also convince the Finance Ministry that the added value would contribute great economic benefit to this nation and the people's welfare so that the activity deserves tax incentive as stimulus to attract investors.
What is disclosed by the Minister with regards to the political will of the government and policies to be applied to enhance added value become panacea for uneasiness of many people because added value of mining products owned by Indonesia is mostly enjoyed by other countries.
Data presented by the Directorate General of Minerals, Coal and Geothermal in 2009 also show that mining products are mostly destined to the export. The share of the export is 70% in coal, 70% in copper and 100% in nickel.
Mineral commodities have been proceeded so that they can be used by other sectors, such as industry, defense and health. For instance, tin ores have been processed to become tin metal, nickel ores have been proceeded to become ferro-nikel and nickelmatte or copper has been proceeded to become copper concentrates, mainly coppoer containing copper, gold and silver. However, the quantity is not higher than 30%, while the remainder is exported in the form of raw materials.
Ironically, in the country having abundant natural resources, even a senior official of the ESDM ministry once joked that all Indonesian mining products have their number, the people still strive to come out of poverty.
Data presented by the Investment Coordinating Board (BKPM) in 2009, show that Indonesia has the second largest tin potential in the world. In the meantime, the copper reserves in Papua, Maluku and Nusa Tenggara also ranks second in the world. Nickel comes into the fifth place, gold is the seventh place and coal ranks eight globalwide.
Ambiguity of Mining Products
The country faces an ambiguous condition as several minerals, such as iron ores and bauxites are exported in the form of raw materials but the country imports iron sponge or pellet to fulfill the need of domestic stell industry or alumina for aluminium industry.
Coal is still treated like charcoal whereas in other countries, South Africa, for instance, coal has been converted into fuel, gasification, coal liquefaction or carbon and several deri-vative products.
The condition encourages the government to include added value into Mining Law Number 4 Year 2009.
Data presented by BKPM in 2010 try to compare added value resulting from bauxite. Based on the data, every ton of bauxite is priced for US$17.
However, after the mineral is processed to become alumina, the price increases eight times to US$350 per ton. If the product is further processed to become alumunium, the price becomes US$2,500/ton, rising 30 times.
In the case of nickel, the price is only US$250 per ton of nickel ore, but the price increases seven times to US$2,574 per ton if the mineral is processed to become FeNi and rises 19 times to US$2,627 per ton after the product is sold in the form of stainless steel.
The description shows that price hike results from every kind of further processing. Other parties have enjoyed the largest profit of Indonesia's mining products for decades, while the prosperity Indonesian people enjoys from mineral resources as mandated by the constitution has never materialized.
Director of the International Business Community Cooperation of BKPM Lily Herawaty said that Indonesia has the seventh largest bauxite reserves in the world and the bauxite is wholly exported in the from of raw material, while importing ferronickel from Australia to fulfill the need of aluminium smelter.Lily also said that Indonesia needs to enhance capacity of aluminium smelter because it constitutes a strategic upstream industry potential to support numerous downstream industries.
Stagnant
Director General of Mineral and Coal Bambang Setiawan said that there is no progress in the enhancement of added value of mining products, either processing or refining.
The statement is also justified by Director of Mineral and Coal Exploitation Development Bambang Gatot Ariyono. ”For the new one, following the issuance of the mining law, the added value has not increased,” he said. Only the existing one, such as smelter, intends to increase the added value but it has not been realized.
Sharing of the same view, Ir. Lily Herawaty,MM, Director of Manufacturing Industry Planning of BKPM said that none of the companies apply for a license to establish smelter after the domestic refining obligation is stipulated in the mining law. New investment in the smelter business is nil either. The existing is only PT. Smelter Gresik, but it has operated before the new mineral and coal law was issued. No company comes into the sector following the enactment of the law.
Head of the Metal, Machine, Textile and Multifarious Industries Sub-Directorate of teh Industry Ministry Wisnu Wijaya Soedibjo also justified the statement.
The existing is only foreign investment, PT Smelting Gresik, belonging to Mitsubishi and it has operated since 1990s. Next is PT Inalum Ashan. In the meantime, the new one, PT. Nusantara Smelting will start the construction in 2011. Reportedly, another smelter PT. Indosmlet in Makassar has secured license form BKPM.
"The new ones are only the companies, while the other has not come," he went on.
Bambang Gatot Ariyono suggested mining companies to cooperate with the gobernment, submit the results of their studies to the government so that solution can be found, whether incentive or other.
“Actually the government also wants to know complaints and expectations of the companies so that both parties could find the best solution because it constitutes a mandate of the law,” he said upon meeting TAMBANG.
However, he conceded none of the companies have submitted input to the government after the companies studied scale of economy and other issues. He also asked the compa-nies to abide by the provision of the law. At least, the companies respect the rule by starting to think about the processing and purification of mining products.
According to him, the government is very open to inputs from parties, including industries, after studying scale of economy of the enhancement of added value.
However, no input has come from companies as if they do not care or concern about the added value issue. He asked companies to not commit it intentionally thus becoming home-work of the government.
“We could talk if they have studied but it is not fulfilled. However, none leads to the extent, whether it's economical or not cannot be proved,” he went on.
In view of the condition, it's not wrong if Presidium Chairman of the Indonesia Mining Society [MPI] Herman Afif Kusumo said firmly that the added value of Indonesia's mining products remains stagnant. The mining specialist has not seen the firmness of the government so that mining business communities have not been obedient wherease the law clearly stipulates that the development of smelter constitutes an obligation.
In the meantime, General Chairman of the Mining Specialist Association (Perhapi) Prof. Irwandy Arief said that the added value of Indonesia's mining products remain in the course of pilot project and has not become an industry whereas the develpment of a smelter, mainly metal smelteer needs around eight years. Unless we prepare from now, the five-year target stipulated in the law won't be fulfilled.
“I am afraid that the five year deadline will elapse unless we take an integrated measure from the upstream to down-stream, ” he said.
Besides costlier, techology still copies other countries. The utilization of the smelter technology will be analyzed from the scale of economy for certain capacity.
In addition, each commodities have different characteristic so that thorough study is needed. Consumers of the products resulting from the enhancement of the added value also needs assesment and attention.
“As a profession organization, Perhapi wants to abridge industry and the government so as to be able to seek the best solution to the enhancement of the added value,” he went on.
In relation thereto, he asked the government to issue policies facilitating investment in the field because investment in smelter is very costlier. According to him, the amount of investment needed for building a smelter is around US$600 million, and surely it's different for each commodities, dependent on the adopted technology.
Later, industry must have a business plan, prepare from now, whether they build individually or cooperate through consortium. Obviously, we must have readiness first, through studies and others.
“The issue is not easy and complex because it's necessary to prepare in an integrated manner as from the upstream to the downstream,” he went on.
Unless the condition is improved, this nation won't be able to enjoy the added value of mining products fully in 2014, five years following the enactment of the mining law.
Source: Majalah Tambang (Alamsyah Pua Saba)
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Sunday, 21 November 10
THE FREIGHT MARKET MAY SLIGHTLY FIRM UP NEXT WEEK - CAPT. REDDY
COALspot.com: The freight market continued its down fall with BDI down by 6.83 pct and closed at 2,155 points.
According to Vistaar Shipping of S ...
Saturday, 20 November 10
ITALIAN STEAM COAL MARKET HAS RECOVERED - ITALIAN COAL ASSOCIATION
Press Release - This year Italy will import 17 million tons of steam coal, up 3% from 2009, and 5.5 million tons of coking coal and PCI, up 37% over ...
Friday, 19 November 10
WE'LL THINK ABOUT COAL TOMORROW - ANALYSIS
The future of coal generation in Russia is in question. The largest energy companies have abandoned their initial plans to switch their therma ...
Friday, 19 November 10
DRY BULK MARKET ON THE ROPES WITH BDI PLUNGING TO 2,164 POINTS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the panamax markets suffering the most this week, but a ray of hope for the capesize market, which appears to be stabilizing after days of fall ...
Thursday, 18 November 10
WORLD COAL ASSOCIATION WELCOMES NEW CHAIRMAN & SHENHUA GROUP AS NEW MEMBER 17 NOVEMBER 2010
Press Release – The premier global coal industry association marks its 25th anniversary with a new Chairman and welcomes China’s lar ...
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- India Bulls Power Limited - India
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- Price Waterhouse Coopers - Russia
- European Bulk Services B.V. - Netherlands
- Meenaskhi Energy Private Limited - India
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- Larsen & Toubro Limited - India
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- Minerals Council of Australia
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- Bharathi Cement Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sakthi Sugars Limited - India
- Port Waratah Coal Services - Australia
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- Kideco Jaya Agung - Indonesia
- The Treasury - Australian Government
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- Madhucon Powers Ltd - India
- Deloitte Consulting - India
- Sical Logistics Limited - India
- Kepco SPC Power Corporation, Philippines
- Ambuja Cements Ltd - India
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- The University of Queensland
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- Mercuria Energy - Indonesia
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- Star Paper Mills Limited - India
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- SMG Consultants - Indonesia
- Bayan Resources Tbk. - Indonesia
- Formosa Plastics Group - Taiwan
- Electricity Authority, New Zealand
- Siam City Cement - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Barasentosa Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- AsiaOL BioFuels Corp., Philippines
- Sojitz Corporation - Japan
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- Romanian Commodities Exchange
- SMC Global Power, Philippines
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- Wood Mackenzie - Singapore
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- Pipit Mutiara Jaya. PT, Indonesia
- Central Electricity Authority - India
- Carbofer General Trading SA - India
- Planning Commission, India
- Intertek Mineral Services - Indonesia
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ind-Barath Power Infra Limited - India
- Bhoruka Overseas - Indonesia
- Mercator Lines Limited - India
- Timah Investasi Mineral - Indoneisa
- Global Coal Blending Company Limited - Australia
- Neyveli Lignite Corporation Ltd, - India
- Directorate Of Revenue Intelligence - India
- Independent Power Producers Association of India
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- International Coal Ventures Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Latin American Coal - Colombia
- Rashtriya Ispat Nigam Limited - India
- LBH Netherlands Bv - Netherlands
- Indian Oil Corporation Limited
- Rio Tinto Coal - Australia
- Australian Commodity Traders Exchange
- Ceylon Electricity Board - Sri Lanka
- Coastal Gujarat Power Limited - India
- Riau Bara Harum - Indonesia
- Aditya Birla Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coalindo Energy - Indonesia
- London Commodity Brokers - England
- Bangladesh Power Developement Board
- Posco Energy - South Korea
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- Jaiprakash Power Ventures ltd
- Bukit Makmur.PT - Indonesia
- Tamil Nadu electricity Board
- Energy Development Corp, Philippines
- Interocean Group of Companies - India
- Toyota Tsusho Corporation, Japan
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Commonwealth Bank - Australia
- Ministry of Mines - Canada
- Sindya Power Generating Company Private Ltd
- Marubeni Corporation - India
- Power Finance Corporation Ltd., India
- Central Java Power - Indonesia
- Petron Corporation, Philippines
- Videocon Industries ltd - India
- VISA Power Limited - India
- Medco Energi Mining Internasional
- Gujarat Mineral Development Corp Ltd - India
- IHS Mccloskey Coal Group - USA
- Standard Chartered Bank - UAE
- Binh Thuan Hamico - Vietnam
- PowerSource Philippines DevCo
- Parry Sugars Refinery, India
- Orica Australia Pty. Ltd.
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- Sinarmas Energy and Mining - Indonesia
- Coal and Oil Company - UAE
- Merrill Lynch Commodities Europe
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- ASAPP Information Group - India
- ICICI Bank Limited - India
- Electricity Generating Authority of Thailand
- IEA Clean Coal Centre - UK
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Baiduri Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- Uttam Galva Steels Limited - India
- Economic Council, Georgia
- Essar Steel Hazira Ltd - India
- Grasim Industreis Ltd - India
- Jindal Steel & Power Ltd - India
- Gujarat Sidhee Cement - India
- Ministry of Finance - Indonesia
- Wilmar Investment Holdings
- Thiess Contractors Indonesia
- MS Steel International - UAE
- GMR Energy Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Dalmia Cement Bharat India
- Vedanta Resources Plc - India
- Orica Mining Services - Indonesia
- Eastern Energy - Thailand
- Alfred C Toepfer International GmbH - Germany
- Chamber of Mines of South Africa
- Australian Coal Association
- PNOC Exploration Corporation - Philippines
- Indonesian Coal Mining Association
- Altura Mining Limited, Indonesia
- Globalindo Alam Lestari - Indonesia
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- SN Aboitiz Power Inc, Philippines
- New Zealand Coal & Carbon
- Aboitiz Power Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Manunggal Multi Energi - Indonesia
- Ministry of Transport, Egypt
- Edison Trading Spa - Italy
- Parliament of New Zealand
- Bhushan Steel Limited - India
- San Jose City I Power Corp, Philippines
- McConnell Dowell - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
- Oldendorff Carriers - Singapore
- Singapore Mercantile Exchange
- Kalimantan Lumbung Energi - Indonesia
- Bulk Trading Sa - Switzerland
- Karaikal Port Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Energy Link Ltd, New Zealand
- Kumho Petrochemical, South Korea
- Jorong Barutama Greston.PT - Indonesia
- Indian Energy Exchange, India
- Georgia Ports Authority, United States
- Iligan Light & Power Inc, Philippines
- Borneo Indobara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement PLC, Thailand
- Mjunction Services Limited - India
- Leighton Contractors Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- White Energy Company Limited
- Kartika Selabumi Mining - Indonesia
- Renaissance Capital - South Africa
- Africa Commodities Group - South Africa
- Meralco Power Generation, Philippines
- CIMB Investment Bank - Malaysia
- Trasteel International SA, Italy
- Antam Resourcindo - Indonesia
- PTC India Limited - India
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- CNBM International Corporation - China
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- Sarangani Energy Corporation, Philippines
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