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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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Saturday, 25 September 10
PRESSURE ON S6 AND S7 ROUTES SEEMS TO BE CONTINUED NEXT WEEK CAPT. REDDY
COALspot.com: The freight market has been flat this week due to holidays in China and low activity saw all sectors down and soft.
The BDI was dow ...
Thursday, 23 September 10
CHURCHILL MINING SHARES JUMP ON EAST KUTAI COAL PROJECT FEASIBILITY RESULTS - STOCKOPEDIA
AIM listed mining group Churchill Mining (LON:CHL) and its Indonesian partners the Ridlatama Group, have completed a feasibility study on the 2.73bn ...
Thursday, 23 September 10
DRY BULK RATES EXPECTEDLY FALL TO ONE MONTH LOWS - HELLENIC SHIPPING
With of the Far East trade routes closed this week on various national holidays, demand for ocean transportation of raw materials has been significa ...
Wednesday, 22 September 10
INDIA TO BE BIGGEST BUYER OF INDONESIAN COAL BY 2011 - BUSINESS STANDARD
India will pass Japan to be the biggest buyer of Indonesian coal by 2011, said Bob Kamandanu, chairman of the Indonesian Coal Mining Association.
...
Wednesday, 22 September 10
DRY BULK MARKET SENTIMENT TURNS SOUTH AS IRON ORE DEMAND DECLINES
The dry bulk market has once again turned the tide, with the industry’s benchmark, the Baltic Dry Index (BDI) turning south during the previou ...
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- Kideco Jaya Agung - Indonesia
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- Trasteel International SA, Italy
- Cement Manufacturers Association - India
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- White Energy Company Limited
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- Eastern Energy - Thailand
- Heidelberg Cement - Germany
- The Treasury - Australian Government
- Minerals Council of Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Parliament of New Zealand
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- Global Business Power Corporation, Philippines
- Australian Commodity Traders Exchange
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- Orica Australia Pty. Ltd.
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- Thai Mozambique Logistica
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- Indian Energy Exchange, India
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- Eastern Coal Council - USA
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- Toyota Tsusho Corporation, Japan
- Independent Power Producers Association of India
- Chamber of Mines of South Africa
- Price Waterhouse Coopers - Russia
- Banpu Public Company Limited - Thailand
- SN Aboitiz Power Inc, Philippines
- Marubeni Corporation - India
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- TNB Fuel Sdn Bhd - Malaysia
- Africa Commodities Group - South Africa
- Kobexindo Tractors - Indoneisa
- Binh Thuan Hamico - Vietnam
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- Wood Mackenzie - Singapore
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- PowerSource Philippines DevCo
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- Parry Sugars Refinery, India
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- Baramulti Group, Indonesia
- Bulk Trading Sa - Switzerland
- Petron Corporation, Philippines
- Coalindo Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Electricity Authority, New Zealand
- Formosa Plastics Group - Taiwan
- Indo Tambangraya Megah - Indonesia
- Mintek Dendrill Indonesia
- McConnell Dowell - Australia
- Holcim Trading Pte Ltd - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Ambuja Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Jaiprakash Power Ventures ltd
- Economic Council, Georgia
- Bangladesh Power Developement Board
- Riau Bara Harum - Indonesia
- Karaikal Port Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Tamil Nadu electricity Board
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- European Bulk Services B.V. - Netherlands
- Essar Steel Hazira Ltd - India
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- LBH Netherlands Bv - Netherlands
- Ind-Barath Power Infra Limited - India
- Power Finance Corporation Ltd., India
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- Miang Besar Coal Terminal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Attock Cement Pakistan Limited
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- Singapore Mercantile Exchange
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- Global Green Power PLC Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Larsen & Toubro Limited - India
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- VISA Power Limited - India
- Meralco Power Generation, Philippines
- Sree Jayajothi Cements Limited - India
- The State Trading Corporation of India Ltd
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- Semirara Mining and Power Corporation, Philippines
- Planning Commission, India
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- Bharathi Cement Corporation - India
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- SMG Consultants - Indonesia
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- Port Waratah Coal Services - Australia
- New Zealand Coal & Carbon
- Malabar Cements Ltd - India
- Lanco Infratech Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Ministry of Mines - Canada
- Energy Link Ltd, New Zealand
- Wilmar Investment Holdings
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- ASAPP Information Group - India
- Coal and Oil Company - UAE
- Anglo American - United Kingdom
- IHS Mccloskey Coal Group - USA
- Sojitz Corporation - Japan
- Therma Luzon, Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Sical Logistics Limited - India
- Coastal Gujarat Power Limited - India
- Carbofer General Trading SA - India
- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- Aditya Birla Group - India
- Bhatia International Limited - India
- Siam City Cement - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Samtan Co., Ltd - South Korea
- Indonesian Coal Mining Association
- Vizag Seaport Private Limited - India
- Standard Chartered Bank - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Thiess Contractors Indonesia
- Leighton Contractors Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Medco Energi Mining Internasional
- Bukit Makmur.PT - Indonesia
- London Commodity Brokers - England
- Altura Mining Limited, Indonesia
- Star Paper Mills Limited - India
- Australian Coal Association
- Posco Energy - South Korea
- IEA Clean Coal Centre - UK
- Grasim Industreis Ltd - India
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- Xindia Steels Limited - India
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- Renaissance Capital - South Africa
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