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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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Friday, 22 August 14
U.S WEEKLY COAL PRODUCTION UP 2.4% WEEK OVER WEEK
COALspot.com – United States the world's second largest coal producer, produced approximately 19.60 million short tons (mmst) of coal in ...
Thursday, 21 August 14
PREDICTIONS FROM VARIOUS SHIPPERS AND MINING INDUSTRY FOR 2ND HALF YEAR AND ESPECIALLY Q4 IS POSITIVE
Handy
The activity has increased in both hemispheres this week and we see rates edging up on all trades. TA´s are now paying around 8k whic ...
Thursday, 21 August 14
SHIP OWNERS KEEP SHYING AWAY FOR NEW SHIP INVESTMENTS, OVERALL TREND IS DOWN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Ship owners have remained in the sidelines of the Sale & Purchasing market for second hand vessels, during most of August, while they also slow ...
Wednesday, 20 August 14
DRY BULK MARKET TO REBOUND IN THE FOURTH QUARTER, OR NOT....- NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The projected rebound of the dry bulk market is still an elusive trend and shipbrokers and analysts are looking to identify the timing of the loomi ...
Monday, 18 August 14
CAPESIZE RATES TO RISE TO MUCH HIGHER LEVELS THIS YEAR - JEFFREY LANDSBERG
COALspot.com: Capesize rates ended last week at $15,561/day, which marked a week-on-week increase of $6,167 (66%). Capesize rates have been a ...
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- Energy Link Ltd, New Zealand
- Siam City Cement - Thailand
- Parliament of New Zealand
- Grasim Industreis Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Baramulti Group, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Parry Sugars Refinery, India
- Ministry of Finance - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Thai Mozambique Logistica
- Maharashtra Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Planning Commission, India
- Latin American Coal - Colombia
- India Bulls Power Limited - India
- Maheswari Brothers Coal Limited - India
- Directorate Of Revenue Intelligence - India
- Singapore Mercantile Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Star Paper Mills Limited - India
- Barasentosa Lestari - Indonesia
- Oldendorff Carriers - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining Corp, Philippines
- Mintek Dendrill Indonesia
- AsiaOL BioFuels Corp., Philippines
- Australian Commodity Traders Exchange
- Jindal Steel & Power Ltd - India
- Indo Tambangraya Megah - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Miang Besar Coal Terminal - Indonesia
- Mercator Lines Limited - India
- Straits Asia Resources Limited - Singapore
- Bhushan Steel Limited - India
- Kumho Petrochemical, South Korea
- Sree Jayajothi Cements Limited - India
- Cement Manufacturers Association - India
- Wood Mackenzie - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- GN Power Mariveles Coal Plant, Philippines
- Goldman Sachs - Singapore
- Coalindo Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Power Finance Corporation Ltd., India
- Bukit Makmur.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Central Electricity Authority - India
- Sindya Power Generating Company Private Ltd
- CIMB Investment Bank - Malaysia
- Iligan Light & Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Riau Bara Harum - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Anglo American - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Ind-Barath Power Infra Limited - India
- Lanco Infratech Ltd - India
- Antam Resourcindo - Indonesia
- Interocean Group of Companies - India
- Renaissance Capital - South Africa
- MS Steel International - UAE
- Cigading International Bulk Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Economic Council, Georgia
- Tamil Nadu electricity Board
- Africa Commodities Group - South Africa
- Timah Investasi Mineral - Indoneisa
- McConnell Dowell - Australia
- Madhucon Powers Ltd - India
- Australian Coal Association
- Kohat Cement Company Ltd. - Pakistan
- Jaiprakash Power Ventures ltd
- LBH Netherlands Bv - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Agrawal Coal Company - India
- Kaltim Prima Coal - Indonesia
- Rio Tinto Coal - Australia
- Karaikal Port Pvt Ltd - India
- ICICI Bank Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Standard Chartered Bank - UAE
- GMR Energy Limited - India
- Eastern Energy - Thailand
- Sical Logistics Limited - India
- Tata Chemicals Ltd - India
- White Energy Company Limited
- Larsen & Toubro Limited - India
- Aditya Birla Group - India
- GAC Shipping (India) Pvt Ltd
- IHS Mccloskey Coal Group - USA
- Bayan Resources Tbk. - Indonesia
- Orica Australia Pty. Ltd.
- Kobexindo Tractors - Indoneisa
- San Jose City I Power Corp, Philippines
- Bangladesh Power Developement Board
- Dalmia Cement Bharat India
- Indian Energy Exchange, India
- Bulk Trading Sa - Switzerland
- Romanian Commodities Exchange
- The University of Queensland
- Minerals Council of Australia
- Jorong Barutama Greston.PT - Indonesia
- Chamber of Mines of South Africa
- Ministry of Mines - Canada
- Price Waterhouse Coopers - Russia
- Sakthi Sugars Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Coal Council - USA
- Edison Trading Spa - Italy
- Central Java Power - Indonesia
- TeaM Sual Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Pendopo Energi Batubara - Indonesia
- European Bulk Services B.V. - Netherlands
- Trasteel International SA, Italy
- Therma Luzon, Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Thiess Contractors Indonesia
- Essar Steel Hazira Ltd - India
- Samtan Co., Ltd - South Korea
- Savvy Resources Ltd - HongKong
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- GVK Power & Infra Limited - India
- Gujarat Sidhee Cement - India
- Meenaskhi Energy Private Limited - India
- Energy Development Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Electricity Generating Authority of Thailand
- Semirara Mining and Power Corporation, Philippines
- ASAPP Information Group - India
- SMG Consultants - Indonesia
- International Coal Ventures Pvt Ltd - India
- Attock Cement Pakistan Limited
- Sojitz Corporation - Japan
- Wilmar Investment Holdings
- Indian Oil Corporation Limited
- IEA Clean Coal Centre - UK
- Marubeni Corporation - India
- Formosa Plastics Group - Taiwan
- London Commodity Brokers - England
- Kapuas Tunggal Persada - Indonesia
- Altura Mining Limited, Indonesia
- VISA Power Limited - India
- Merrill Lynch Commodities Europe
- Deloitte Consulting - India
- PTC India Limited - India
- Intertek Mineral Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Indika Energy - Indonesia
- The Treasury - Australian Government
- SN Aboitiz Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- PowerSource Philippines DevCo
- Meralco Power Generation, Philippines
- Toyota Tsusho Corporation, Japan
- Chettinad Cement Corporation Ltd - India
- Bharathi Cement Corporation - India
- Uttam Galva Steels Limited - India
- South Luzon Thermal Energy Corporation
- Xindia Steels Limited - India
- Makarim & Taira - Indonesia
- Mercuria Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- SMC Global Power, Philippines
- Neyveli Lignite Corporation Ltd, - India
- The State Trading Corporation of India Ltd
- CNBM International Corporation - China
- Global Coal Blending Company Limited - Australia
- Vedanta Resources Plc - India
- Global Business Power Corporation, Philippines
- Videocon Industries ltd - India
- Georgia Ports Authority, United States
- Posco Energy - South Korea
- Bhatia International Limited - India
- Carbofer General Trading SA - India
- Petrochimia International Co. Ltd.- Taiwan
- Coastal Gujarat Power Limited - India
- Heidelberg Cement - Germany
- Petron Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Ambuja Cements Ltd - India
- Mjunction Services Limited - India
- Siam City Cement PLC, Thailand
- Malabar Cements Ltd - India
- New Zealand Coal & Carbon
- Independent Power Producers Association of India
- Orica Mining Services - Indonesia
- Electricity Authority, New Zealand
- Globalindo Alam Lestari - Indonesia
- Borneo Indobara - Indonesia
- Indonesian Coal Mining Association
- Coal and Oil Company - UAE
- Bhoruka Overseas - Indonesia
- Medco Energi Mining Internasional
- OPG Power Generation Pvt Ltd - India
- Ministry of Transport, Egypt
- Commonwealth Bank - Australia
- Aboitiz Power Corporation - Philippines
- Indogreen Group - Indonesia
- Kartika Selabumi Mining - Indonesia
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