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Friday, 08 August 14
MINING DISPUTE IS CRIPPLING LOCAL ECONOMIES IN EASTERN INDONESIA - JG
 - By Iwan Harsono -
It seems as if there’s no end in sight to the series of negotiations between the government and mining companies about the Law on Mineral and Coal Mining (No. 4/2009), especially when taking into consideration the fact that Newmont Nusa Tenggara has opted to file for arbitration against the government of Indonesia. Geographically speaking, most mining giants, like Newmont and Freeport Indonesia, are operating in the Eastern Indonesia Region (KTI), comprising Papua, Maluku, Nusa Tenggara and Sulawesi, and the legal uncertainty surrounding mining operations has therefore led to a regional dip in economic growth.
Principally, the purpose of the Mining Law is noble, since it aims to increase the quality of the nation’s mineral exports for the benefit of its citizens, as stated in Article 33 of the 1945 Constitution. To complicate matters, however, several parties have argued that the Indonesian government isn’t ready yet to implement the law. Such circumstances have in turn led to the shutdown of several mineral mining companies across the country, particular in the east, a region rich in lucrative resources such as gold, copper and nickel.
Economic resilience
Currently, Eastern Indonesia is facing major developmental challenges and lately the investment climate has been less than helpful in increasing the region’s economic resilience. Eastern Indonesia has become a region that has suffered the most following the implementation of the Mining Law. At the macro level, this policy has resulted in a significant decrease in economic resilience. For instance, the region’s economic growth in the first quarter of 2014 fell to 4.6 percent (year on year), from 6.6 percent in the fourth quarter of 2013. Economic growth has struggled in several provinces, the majority of which rely heavily on the mining sector, especially Southeast Sulawesi, Papua, West Papua, West Nusa Tenggara, and West Kalimantan.
West Nusa Tenggara saw its economic growth decrease by 3.94 percent, with the mining industry suffering one of the sharpest declines at 9.82 percent in the first quarter of 2014. To make matters worse, an imbalance in the export-import rate often also leads to an even sharper overall economic decline.
There have been many changes following the implementation of the export ban in January earlier this year, and companies in the mining industry have struggled to cope. Strong sales overseas and the availability of only a limited number of smelters has influenced the production of copper (in Papua and Nusa Tenggara), nickel (in Sulawesi) and bauxite (in Kalimantan), and recently it has even threatened the coal industry as well.
Domino effect
Companies that didn’t see any way to sell their extracted resources were forced to shut down, send their employees home with limited pay or in some cases, dismiss them outright. Based on data from the Indonesia Mining Association, approximately 133,000 employees have been dismissed so far.
Newmont, for instance, sent home 6,400 of its employees in June because stockpiles have been full since last May due to the export ban. As one of the most important contributors to the local economy in West Sumbawa, Newmont’s production halt has impacted both the local and regional economies.
And there will be a domino effect on all other sectors that depend on the mining operations, for instance by providing services, and on the government, which will see a drop in tax and royalty income.
While those who were sent home are still receiving their salaries — albeit not the full amount — the economic impact has affected the communities surrounding the mining site the most, as most of them rely heavily on Newmont’s operations. Most of the small shop owners have complained of having excess stock as spending power continues to fall.
Handayani, a local diner owner, said that before the current economic struggles she often earned as much as Rp 10 million ($850) in a single day, though these days she claims she’s lucky if she can earn Rp 1 million by noon. Consequently, she has been forced to cut the number of her employees down from 12 to six.
When we look at the bigger picture, Newmont claims that the West Sumbawa region stands to lose as much as $726 million per year, the most of which comes from decreasing CSR investment, salaries and domestic purchases. If we take tax and royalties into consideration as well, the number would rise to $887 million annually.
Possible solutions
To strengthen the economy of Eastern Indonesia we will need to improve the regional infrastructure for transportation, specifically through the renovation of ports and airports in strategic cities. Unfortunately, at the moment the fear of losing employment has been on everyone’s mind.
With hindsight being 20/20, in retrospect the government should have prepared a mitigation plan prior to implementing the current regulation. Fear, anxiety and uncertainty have miners and surrounding communities worried. They have no other option but to hope the government steps in and lends a helping hand.
Renegotiations have to be finalized sooner rather than later.
For its part, the government has to be wise if it wants to solve the dispute with those involved. From both a macro and a micro economic perspective, the current mining dispute presents a major obstacle to development in Eastern Indonesia.
Renegotiations should offer a solution that is beneficial for both mining companies and the government in order to ensure that operations can be resumed as soon as possible. And it is crucial that the government prepare a safety net for local communities that depend on mining operations. Finally, a mitigation plan should be included in future mining regulations, specifically one that keeps the welfare of the locals in mind. These steps should be taken quickly if we want to fulfil the promises of our constitution.
Iwan Harsono, a member of the Advisory Board for Economic Resources in West Lombok, is a lecturer in economics at the University of Mataram.
This article was originally published in The Jakarta Globe
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Wednesday, 03 September 14
KOREA MIDLAND POWER CO. LTD INVITES BIDS FOR 1 MMT OF BITUMINOUS & SUB-BITUMINOUS COAL FOR BORYEONG POWER PLANT
COALspot.com: KOMIPO again in the market for 1 million tons of 5700 NAR and 4600 NAR coal for Jan – March 2015. South Korean state-owned util ...
Wednesday, 03 September 14
CFR S.CHINA COAL SWAP FOR JAN 2015 DELIVERY CLOSED AT $ 68.30 PMT; DOWN 2.43% W-O-W
COALspot.com: API 8 CFR South China Coal swap for delivery in October 2014 decreased US$ 0.95 (-1.39%) day on day and US$ 1.40 (-2.03%) week on wee ...
Tuesday, 02 September 14
BERAU COAL HAS AWARDED A CONTRACT EXTENSION TO BUMA FOR 647 MLN BCM OVERBURDEN REMOVAL
COALspot.com: PT Delta Dunia Makmur Tbk (“DOID”) has announced that its primary operating subsidiary, PT Bukit Makmur Mandiri Utama (&l ...
Monday, 01 September 14
GLOBALCOAL WELCOMES TWO NEW MARKET MEMBERS
COALspot.com: globalCOAL® announced today that two Market Members have joined its trading community. Both new Market Members are from the India ...
Sunday, 31 August 14
COAL FREIGHT RATES INTO INDIA FROM INDONESIA FIRM
COALspot.com: The freight market continued to firm this week. BDI up 5.42 percent week ended 29 August and closed at 1147 points while the Ca ...
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- Deloitte Consulting - India
- Ambuja Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- Aboitiz Power Corporation - Philippines
- Bharathi Cement Corporation - India
- Kobexindo Tractors - Indoneisa
- ICICI Bank Limited - India
- The University of Queensland
- Mintek Dendrill Indonesia
- Ministry of Transport, Egypt
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- Salva Resources Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Kapuas Tunggal Persada - Indonesia
- Barasentosa Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Orica Mining Services - Indonesia
- Medco Energi Mining Internasional
- Dalmia Cement Bharat India
- Borneo Indobara - Indonesia
- Sree Jayajothi Cements Limited - India
- IHS Mccloskey Coal Group - USA
- Vijayanagar Sugar Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Indogreen Group - Indonesia
- Toyota Tsusho Corporation, Japan
- Cement Manufacturers Association - India
- Rio Tinto Coal - Australia
- Latin American Coal - Colombia
- Energy Link Ltd, New Zealand
- Thiess Contractors Indonesia
- Marubeni Corporation - India
- Chamber of Mines of South Africa
- Bukit Baiduri Energy - Indonesia
- Trasteel International SA, Italy
- Ministry of Finance - Indonesia
- Global Coal Blending Company Limited - Australia
- Bhoruka Overseas - Indonesia
- Videocon Industries ltd - India
- Timah Investasi Mineral - Indoneisa
- Agrawal Coal Company - India
- Sakthi Sugars Limited - India
- Jorong Barutama Greston.PT - Indonesia
- GVK Power & Infra Limited - India
- Electricity Generating Authority of Thailand
- Planning Commission, India
- Kumho Petrochemical, South Korea
- Indian Oil Corporation Limited
- Orica Australia Pty. Ltd.
- Global Business Power Corporation, Philippines
- Central Electricity Authority - India
- Malabar Cements Ltd - India
- Mercuria Energy - Indonesia
- Ministry of Mines - Canada
- Power Finance Corporation Ltd., India
- Parliament of New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- Simpson Spence & Young - Indonesia
- Minerals Council of Australia
- SMC Global Power, Philippines
- Star Paper Mills Limited - India
- Eastern Coal Council - USA
- CNBM International Corporation - China
- Energy Development Corp, Philippines
- SMG Consultants - Indonesia
- OPG Power Generation Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Edison Trading Spa - Italy
- Straits Asia Resources Limited - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Thai Mozambique Logistica
- Port Waratah Coal Services - Australia
- Jindal Steel & Power Ltd - India
- Ind-Barath Power Infra Limited - India
- Georgia Ports Authority, United States
- Renaissance Capital - South Africa
- Meenaskhi Energy Private Limited - India
- Aditya Birla Group - India
- Maheswari Brothers Coal Limited - India
- Directorate Of Revenue Intelligence - India
- Karaikal Port Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Xindia Steels Limited - India
- European Bulk Services B.V. - Netherlands
- VISA Power Limited - India
- Bhushan Steel Limited - India
- PowerSource Philippines DevCo
- Pendopo Energi Batubara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Grasim Industreis Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Bhatia International Limited - India
- Riau Bara Harum - Indonesia
- Lanco Infratech Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Attock Cement Pakistan Limited
- Oldendorff Carriers - Singapore
- Chettinad Cement Corporation Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Anglo American - United Kingdom
- Global Green Power PLC Corporation, Philippines
- White Energy Company Limited
- Tata Chemicals Ltd - India
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- Merrill Lynch Commodities Europe
- Singapore Mercantile Exchange
- Coal and Oil Company - UAE
- Parry Sugars Refinery, India
- India Bulls Power Limited - India
- GAC Shipping (India) Pvt Ltd
- South Luzon Thermal Energy Corporation
- Indika Energy - Indonesia
- McConnell Dowell - Australia
- Carbofer General Trading SA - India
- Baramulti Group, Indonesia
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Economic Council, Georgia
- Gujarat Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Madhucon Powers Ltd - India
- Intertek Mineral Services - Indonesia
- Formosa Plastics Group - Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Rashtriya Ispat Nigam Limited - India
- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Vizag Seaport Private Limited - India
- Posco Energy - South Korea
- Siam City Cement PLC, Thailand
- Therma Luzon, Inc, Philippines
- Makarim & Taira - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Antam Resourcindo - Indonesia
- Standard Chartered Bank - UAE
- Coastal Gujarat Power Limited - India
- Heidelberg Cement - Germany
- Sojitz Corporation - Japan
- Romanian Commodities Exchange
- PNOC Exploration Corporation - Philippines
- The Treasury - Australian Government
- Iligan Light & Power Inc, Philippines
- Semirara Mining Corp, Philippines
- PTC India Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tamil Nadu electricity Board
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- Vedanta Resources Plc - India
- GMR Energy Limited - India
- Wilmar Investment Holdings
- Bank of Tokyo Mitsubishi UFJ Ltd
- SN Aboitiz Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- The State Trading Corporation of India Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petron Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Banpu Public Company Limited - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Karbindo Abesyapradhi - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Independent Power Producers Association of India
- Holcim Trading Pte Ltd - Singapore
- Samtan Co., Ltd - South Korea
- Jaiprakash Power Ventures ltd
- Eastern Energy - Thailand
- Australian Coal Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- San Jose City I Power Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- CIMB Investment Bank - Malaysia
- ASAPP Information Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Mercator Lines Limited - India
- Indonesian Coal Mining Association
- Electricity Authority, New Zealand
- Billiton Holdings Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- MS Steel International - UAE
- Indian Energy Exchange, India
- Siam City Cement - Thailand
- Coalindo Energy - Indonesia
- Uttam Galva Steels Limited - India
- Sarangani Energy Corporation, Philippines
- IEA Clean Coal Centre - UK
- Meralco Power Generation, Philippines
- Wood Mackenzie - Singapore
- Australian Commodity Traders Exchange
- LBH Netherlands Bv - Netherlands
- Gujarat Sidhee Cement - India
- Altura Mining Limited, Indonesia
- Bangladesh Power Developement Board
- Commonwealth Bank - Australia
- Leighton Contractors Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Bulk Trading Sa - Switzerland
- Mjunction Services Limited - India
- London Commodity Brokers - England
- Sical Logistics Limited - India
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