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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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Saturday, 30 August 14
INDIAN GOVERNMENT SHOULD TAKE NOTICE: THERMAL COAL IMPORT PRICES EXTREMELY LOW - COMMODORE RESEARCH
COALspot.com: Both Indonesian and Australian thermal coal prices are at the lowest levels seen this decade, with Indonesia's monthly benchmark ...
Saturday, 30 August 14
RECOVERY IN SIGHT FOR THE DRY BULK SHIPPING MARKET - DREWRY SHIPPING CONSULTANTS
Despite weak freight rates so far this year, Dry Bulk shipping earnings are forecast to recover as demand for both major and minor bulk commodities ...
Friday, 29 August 14
U.S. WEEKLY COAL PRODUCTION DROPS 1.3 PERCENT, EIA SAYS
COALspot.com – United States the world's second largest coal producer, produced approximately 19.40 million short tons (mmst) of coal in ...
Friday, 29 August 14
ADARO'S PROFITS SINK FURTHER AMID FALL IN COAL PRICES - JP
Adaro Energy, one of the country’s largest coal miners, has reported a 31 percent drop in net profit in the first half of this year as global ...
Friday, 29 August 14
CHINESE LIGNITE IMPORTS: QUANTITY OVER QUALITY? - CLARKSONS
In the first half of 2014, Chinese seaborne coal imports declined 0.4% y-o-y to 148mt, largely reflecting a 3.3% fall in imports of steam coal. Mea ...
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- Gujarat Sidhee Cement - India
- Sakthi Sugars Limited - India
- Straits Asia Resources Limited - Singapore
- Orica Mining Services - Indonesia
- Carbofer General Trading SA - India
- Ceylon Electricity Board - Sri Lanka
- Aditya Birla Group - India
- Energy Link Ltd, New Zealand
- Bharathi Cement Corporation - India
- Port Waratah Coal Services - Australia
- IEA Clean Coal Centre - UK
- Kideco Jaya Agung - Indonesia
- CIMB Investment Bank - Malaysia
- Electricity Authority, New Zealand
- Essar Steel Hazira Ltd - India
- Indian Oil Corporation Limited
- Bangladesh Power Developement Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Globalindo Alam Lestari - Indonesia
- Standard Chartered Bank - UAE
- Maharashtra Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- Georgia Ports Authority, United States
- Directorate General of MIneral and Coal - Indonesia
- Jindal Steel & Power Ltd - India
- Manunggal Multi Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Mercuria Energy - Indonesia
- Thai Mozambique Logistica
- Deloitte Consulting - India
- Samtan Co., Ltd - South Korea
- Madhucon Powers Ltd - India
- Bukit Baiduri Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- PTC India Limited - India
- Latin American Coal - Colombia
- Independent Power Producers Association of India
- Coalindo Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- TNB Fuel Sdn Bhd - Malaysia
- Uttam Galva Steels Limited - India
- Sojitz Corporation - Japan
- The State Trading Corporation of India Ltd
- Holcim Trading Pte Ltd - Singapore
- Maheswari Brothers Coal Limited - India
- Cigading International Bulk Terminal - Indonesia
- Indonesian Coal Mining Association
- Metalloyd Limited - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Finance - Indonesia
- Kepco SPC Power Corporation, Philippines
- Romanian Commodities Exchange
- Kohat Cement Company Ltd. - Pakistan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Baramulti Group, Indonesia
- Renaissance Capital - South Africa
- Vizag Seaport Private Limited - India
- Price Waterhouse Coopers - Russia
- Posco Energy - South Korea
- San Jose City I Power Corp, Philippines
- Agrawal Coal Company - India
- Sinarmas Energy and Mining - Indonesia
- Africa Commodities Group - South Africa
- ASAPP Information Group - India
- Semirara Mining Corp, Philippines
- CNBM International Corporation - China
- Rio Tinto Coal - Australia
- Makarim & Taira - Indonesia
- Kaltim Prima Coal - Indonesia
- GMR Energy Limited - India
- OPG Power Generation Pvt Ltd - India
- Ministry of Transport, Egypt
- Kalimantan Lumbung Energi - Indonesia
- Larsen & Toubro Limited - India
- PNOC Exploration Corporation - Philippines
- Bhushan Steel Limited - India
- White Energy Company Limited
- Pendopo Energi Batubara - Indonesia
- Altura Mining Limited, Indonesia
- Mintek Dendrill Indonesia
- Indika Energy - Indonesia
- India Bulls Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Wood Mackenzie - Singapore
- Coal and Oil Company - UAE
- Singapore Mercantile Exchange
- Salva Resources Pvt Ltd - India
- Indian Energy Exchange, India
- Riau Bara Harum - Indonesia
- Videocon Industries ltd - India
- Orica Australia Pty. Ltd.
- Leighton Contractors Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Edison Trading Spa - Italy
- Xindia Steels Limited - India
- SMC Global Power, Philippines
- London Commodity Brokers - England
- Coastal Gujarat Power Limited - India
- Minerals Council of Australia
- Kobexindo Tractors - Indoneisa
- Eastern Coal Council - USA
- New Zealand Coal & Carbon
- Jorong Barutama Greston.PT - Indonesia
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- Antam Resourcindo - Indonesia
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Kumho Petrochemical, South Korea
- Intertek Mineral Services - Indonesia
- Central Electricity Authority - India
- Karbindo Abesyapradhi - Indoneisa
- Simpson Spence & Young - Indonesia
- Bhoruka Overseas - Indonesia
- Heidelberg Cement - Germany
- Formosa Plastics Group - Taiwan
- Sical Logistics Limited - India
- Ambuja Cements Ltd - India
- Parry Sugars Refinery, India
- European Bulk Services B.V. - Netherlands
- Dalmia Cement Bharat India
- Kapuas Tunggal Persada - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Trasteel International SA, Italy
- Anglo American - United Kingdom
- Meenaskhi Energy Private Limited - India
- Merrill Lynch Commodities Europe
- Power Finance Corporation Ltd., India
- Miang Besar Coal Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bukit Makmur.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Global Business Power Corporation, Philippines
- Wilmar Investment Holdings
- Tata Chemicals Ltd - India
- International Coal Ventures Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Mercator Lines Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The University of Queensland
- Alfred C Toepfer International GmbH - Germany
- Marubeni Corporation - India
- The Treasury - Australian Government
- SN Aboitiz Power Inc, Philippines
- Grasim Industreis Ltd - India
- Siam City Cement - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Chamber of Mines of South Africa
- VISA Power Limited - India
- Australian Coal Association
- Bayan Resources Tbk. - Indonesia
- PowerSource Philippines DevCo
- Medco Energi Mining Internasional
- Cement Manufacturers Association - India
- Oldendorff Carriers - Singapore
- Jaiprakash Power Ventures ltd
- Bhatia International Limited - India
- Ministry of Mines - Canada
- Semirara Mining and Power Corporation, Philippines
- Goldman Sachs - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Sree Jayajothi Cements Limited - India
- Global Green Power PLC Corporation, Philippines
- Attock Cement Pakistan Limited
- Commonwealth Bank - Australia
- Savvy Resources Ltd - HongKong
- Ind-Barath Power Infra Limited - India
- Siam City Cement PLC, Thailand
- Petron Corporation, Philippines
- Vedanta Resources Plc - India
- Meralco Power Generation, Philippines
- Indo Tambangraya Megah - Indonesia
- McConnell Dowell - Australia
- Karaikal Port Pvt Ltd - India
- Energy Development Corp, Philippines
- Indogreen Group - Indonesia
- Electricity Generating Authority of Thailand
- Parliament of New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- Star Paper Mills Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aboitiz Power Corporation - Philippines
- GVK Power & Infra Limited - India
- ICICI Bank Limited - India
- Interocean Group of Companies - India
- LBH Netherlands Bv - Netherlands
- Directorate Of Revenue Intelligence - India
- Malabar Cements Ltd - India
- Barasentosa Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Thiess Contractors Indonesia
- Banpu Public Company Limited - Thailand
- Billiton Holdings Pty Ltd - Australia
- Lanco Infratech Ltd - India
- GAC Shipping (India) Pvt Ltd
- SMG Consultants - Indonesia
- Planning Commission, India
- Iligan Light & Power Inc, Philippines
- Therma Luzon, Inc, Philippines
- Eastern Energy - Thailand
- Krishnapatnam Port Company Ltd. - India
- MS Steel International - UAE
- Australian Commodity Traders Exchange
- Timah Investasi Mineral - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Kartika Selabumi Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Tamil Nadu electricity Board
- TeaM Sual Corporation - Philippines
- Borneo Indobara - Indonesia
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