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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 $887 million annually.
Possible solutions
To strengthen the economy of Eastern Indonesia we will need to improve the regional infrastructure for transportation, specifically through the renovation of ports and airports in strategic cities. Unfortunately, at the moment the fear of losing employment has been on everyone’s mind.
With hindsight being 20/20, in retrospect the government should have prepared a mitigation plan prior to implementing the current regulation. Fear, anxiety and uncertainty have miners and surrounding communities worried. They have no other option but to hope the government steps in and lends a helping hand.
Renegotiations have to be finalized sooner rather than later.
For its part, the government has to be wise if it wants to solve the dispute with those involved. From both a macro and a micro economic perspective, the current mining dispute presents a major obstacle to development in Eastern Indonesia.
Renegotiations should offer a solution that is beneficial for both mining companies and the government in order to ensure that operations can be resumed as soon as possible. And it is crucial that the government prepare a safety net for local communities that depend on mining operations. Finally, a mitigation plan should be included in future mining regulations, specifically one that keeps the welfare of the locals in mind. These steps should be taken quickly if we want to fulfil the promises of our constitution.
Iwan Harsono, a member of the Advisory Board for Economic Resources in West Lombok, is a lecturer in economics at the University of Mataram.
This article was originally published in The Jakarta Globe
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Monday, 25 August 14
API 8 CFR SOUTH CHINA COAL SWAP GAINED DAY OVER DAY AND MONTH OVER MONTH
COALspot.com: API 8 CFR South China Coal swap for delivery in September 2014 increased US$ 0.30 (+0.44%) day on day and decreased US$ 0.20 (- ...
Sunday, 24 August 14
SEA FREIGHT MARKETS STARTING TO LOOK POSITIVE; CAPES DRIVE FREIGHTS HIGHER
COALspot.com: The freight market has strengthen further this week with BDI up 7.19 pct week on week. The BDI was closed at 1,088 points while the B ...
Friday, 22 August 14
INDIAN IRON ORE ROYALTY RISE NOT LIKELY TO HURT STEELMAKERS' MARGINS - FITCH
Fitch Ratings does not expect an increase in India's iron ore royalty rates to have a major impact on the profitability of steel producers in t ...
Friday, 22 August 14
ARBITRATION CLAUSE IN LOU HELD TO REPLACE CHARTERPARTY ARBITRATION CLAUSE
KNOWLEDGE TO ELEVATE
The Claimants had claims for cargo damage against the vessel Owners arising under four bills of lading. The vessel was th ...
Friday, 22 August 14
ICAP ENERGY LAUNCHES GLOBAL COKING COAL DERIVATIVES TRADING
First contract completed and cleared on CME
COALspot.com: ICAP Energy, the energy business of ICAP plc, announces today that it has successful ...
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- European Bulk Services B.V. - Netherlands
- OPG Power Generation Pvt Ltd - India
- Chamber of Mines of South Africa
- Tata Chemicals Ltd - India
- Central Java Power - Indonesia
- Energy Link Ltd, New Zealand
- Romanian Commodities Exchange
- Malabar Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Commonwealth Bank - Australia
- Madhucon Powers Ltd - India
- Global Green Power PLC Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Posco Energy - South Korea
- Kepco SPC Power Corporation, Philippines
- Petron Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Metalloyd Limited - United Kingdom
- Salva Resources Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- SMG Consultants - Indonesia
- Sree Jayajothi Cements Limited - India
- Manunggal Multi Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Jindal Steel & Power Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Indika Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Timah Investasi Mineral - Indoneisa
- Samtan Co., Ltd - South Korea
- Ministry of Mines - Canada
- AsiaOL BioFuels Corp., Philippines
- Parliament of New Zealand
- Grasim Industreis Ltd - India
- Bhushan Steel Limited - India
- Latin American Coal - Colombia
- Indian Oil Corporation Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Parry Sugars Refinery, India
- Antam Resourcindo - Indonesia
- New Zealand Coal & Carbon
- Xindia Steels Limited - India
- Marubeni Corporation - India
- Globalindo Alam Lestari - Indonesia
- Siam City Cement - Thailand
- South Luzon Thermal Energy Corporation
- Star Paper Mills Limited - India
- Makarim & Taira - Indonesia
- Coalindo Energy - Indonesia
- Carbofer General Trading SA - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining Corp, Philippines
- Toyota Tsusho Corporation, Japan
- SN Aboitiz Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Deloitte Consulting - India
- Indo Tambangraya Megah - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Pendopo Energi Batubara - Indonesia
- Planning Commission, India
- Gujarat Mineral Development Corp Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Tamil Nadu electricity Board
- Central Electricity Authority - India
- Aboitiz Power Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Power Finance Corporation Ltd., India
- Renaissance Capital - South Africa
- Mercuria Energy - Indonesia
- Electricity Authority, New Zealand
- Australian Commodity Traders Exchange
- CNBM International Corporation - China
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Australia Pty. Ltd.
- McConnell Dowell - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PowerSource Philippines DevCo
- Bangladesh Power Developement Board
- Sical Logistics Limited - India
- Thiess Contractors Indonesia
- GMR Energy Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ind-Barath Power Infra Limited - India
- TeaM Sual Corporation - Philippines
- Georgia Ports Authority, United States
- Agrawal Coal Company - India
- Leighton Contractors Pty Ltd - Australia
- Sojitz Corporation - Japan
- Gujarat Electricity Regulatory Commission - India
- MS Steel International - UAE
- Bukit Baiduri Energy - Indonesia
- GVK Power & Infra Limited - India
- Altura Mining Limited, Indonesia
- PTC India Limited - India
- Independent Power Producers Association of India
- Edison Trading Spa - Italy
- Ministry of Finance - Indonesia
- Interocean Group of Companies - India
- The Treasury - Australian Government
- Mercator Lines Limited - India
- Kapuas Tunggal Persada - Indonesia
- Kobexindo Tractors - Indoneisa
- Indian Energy Exchange, India
- Kideco Jaya Agung - Indonesia
- Meenaskhi Energy Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Global Coal Blending Company Limited - Australia
- ASAPP Information Group - India
- Bulk Trading Sa - Switzerland
- Bahari Cakrawala Sebuku - Indonesia
- The State Trading Corporation of India Ltd
- Goldman Sachs - Singapore
- Economic Council, Georgia
- SMC Global Power, Philippines
- Karaikal Port Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Riau Bara Harum - Indonesia
- Indogreen Group - Indonesia
- Savvy Resources Ltd - HongKong
- Baramulti Group, Indonesia
- Eastern Coal Council - USA
- Kaltim Prima Coal - Indonesia
- Larsen & Toubro Limited - India
- Mintek Dendrill Indonesia
- Ministry of Transport, Egypt
- Indonesian Coal Mining Association
- Directorate Of Revenue Intelligence - India
- Sinarmas Energy and Mining - Indonesia
- Wood Mackenzie - Singapore
- IHS Mccloskey Coal Group - USA
- Banpu Public Company Limited - Thailand
- Bharathi Cement Corporation - India
- The University of Queensland
- Maharashtra Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Attock Cement Pakistan Limited
- Eastern Energy - Thailand
- Medco Energi Mining Internasional
- Kartika Selabumi Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- Thai Mozambique Logistica
- Energy Development Corp, Philippines
- Anglo American - United Kingdom
- Coal and Oil Company - UAE
- White Energy Company Limited
- Standard Chartered Bank - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Coastal Gujarat Power Limited - India
- Cement Manufacturers Association - India
- Bukit Makmur.PT - Indonesia
- IEA Clean Coal Centre - UK
- ICICI Bank Limited - India
- Siam City Cement PLC, Thailand
- Electricity Generating Authority of Thailand
- Meralco Power Generation, Philippines
- Videocon Industries ltd - India
- Dalmia Cement Bharat India
- Gujarat Sidhee Cement - India
- Orica Mining Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Kumho Petrochemical, South Korea
- Sarangani Energy Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Heidelberg Cement - Germany
- CIMB Investment Bank - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aditya Birla Group - India
- Kalimantan Lumbung Energi - Indonesia
- Bhatia International Limited - India
- Ceylon Electricity Board - Sri Lanka
- Bayan Resources Tbk. - Indonesia
- London Commodity Brokers - England
- Global Business Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- VISA Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Krishnapatnam Port Company Ltd. - India
- Intertek Mineral Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wilmar Investment Holdings
- Vizag Seaport Private Limited - India
- Trasteel International SA, Italy
- GN Power Mariveles Coal Plant, Philippines
- Rio Tinto Coal - Australia
- Alfred C Toepfer International GmbH - Germany
- San Jose City I Power Corp, Philippines
- Minerals Council of Australia
- Straits Asia Resources Limited - Singapore
- Sakthi Sugars Limited - India
- Mjunction Services Limited - India
- Lanco Infratech Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Australian Coal Association
- Vedanta Resources Plc - India
- India Bulls Power Limited - India
- Singapore Mercantile Exchange
- Oldendorff Carriers - Singapore
- Africa Commodities Group - South Africa
- Cigading International Bulk Terminal - Indonesia
- Port Waratah Coal Services - Australia
- Neyveli Lignite Corporation Ltd, - India
- Formosa Plastics Group - Taiwan
- Essar Steel Hazira Ltd - India
- Maheswari Brothers Coal Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Uttam Galva Steels Limited - India
- Binh Thuan Hamico - Vietnam
- Ambuja Cements Ltd - India
- Merrill Lynch Commodities Europe
- Simpson Spence & Young - Indonesia
- LBH Netherlands Bv - Netherlands
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