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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, 18 August 14
SUB-BIT FOB INDONESIA COAL SWAP CLOSED AT $58.60 FOR SEPTEMBER 2015; UP $4 FROM SEPTEMBER 2014 CLOSING
COALspot.com: Indonesian coal swaps for average September 2014 decreased US$ 0.15 (-0.27%) day on day and US$ 0.75 (-1.36%) per mt week on week. Th ...
Monday, 18 August 14
CFR SOUTH CHINA COAL SWAP PERFORMED WELL THIS PAST WEEK
COALspot.com: API 8 CFR South China Coal swap for delivery in September 2014 increased US$ 0.45 (+0.66%) day on day and US$ 0.30 (+0.44%)&nbs ...
Saturday, 16 August 14
HIGH DEMAND OF IRON ORE SHIPMENTS PUSHED CAPE INDEX UPWARDS
COALspot.com: This week's freight market was buoyant with Cape and panamax index seeing a big jump pushing the BDI above 1,000 points week on c ...
Friday, 15 August 14
5TH ANNUAL POWER AND ELECTRICITY INDONESIA
5TH ANNUAL POWER AND ELECTRICITY INDONESIA
13-16 October 2014
Grand Hyatt Jakarta, Indonesia
Web Site
The country’s definitive ...
Thursday, 14 August 14
U.S. STEAM COAL IMPORTS REMAIN DOWN SHARPLY FROM HISTORIC HIGH IN 2007, SAYS EIA
COALspot.com: U.S. steam coal imports at power plants have fallen significantly from their peak level of more than 30 million tons in 2007 to less ...
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- Romanian Commodities Exchange
- Miang Besar Coal Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Merrill Lynch Commodities Europe
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Commodity Traders Exchange
- The Treasury - Australian Government
- Port Waratah Coal Services - Australia
- Sical Logistics Limited - India
- Attock Cement Pakistan Limited
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Rio Tinto Coal - Australia
- Kumho Petrochemical, South Korea
- Tamil Nadu electricity Board
- Kideco Jaya Agung - Indonesia
- Aditya Birla Group - India
- PetroVietnam Power Coal Import and Supply Company
- Leighton Contractors Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- Toyota Tsusho Corporation, Japan
- Indo Tambangraya Megah - Indonesia
- Siam City Cement - Thailand
- Samtan Co., Ltd - South Korea
- Holcim Trading Pte Ltd - Singapore
- Cement Manufacturers Association - India
- Trasteel International SA, Italy
- Coalindo Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Altura Mining Limited, Indonesia
- Posco Energy - South Korea
- Bayan Resources Tbk. - Indonesia
- London Commodity Brokers - England
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- Borneo Indobara - Indonesia
- Madhucon Powers Ltd - India
- Ind-Barath Power Infra Limited - India
- Heidelberg Cement - Germany
- Chettinad Cement Corporation Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- European Bulk Services B.V. - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Ministry of Mines - Canada
- GN Power Mariveles Coal Plant, Philippines
- Deloitte Consulting - India
- OPG Power Generation Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Orica Mining Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Directorate General of MIneral and Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Antam Resourcindo - Indonesia
- Parliament of New Zealand
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- Electricity Authority, New Zealand
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- Global Green Power PLC Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Karaikal Port Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Australian Coal Association
- Billiton Holdings Pty Ltd - Australia
- White Energy Company Limited
- Malabar Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Price Waterhouse Coopers - Russia
- Formosa Plastics Group - Taiwan
- The State Trading Corporation of India Ltd
- Interocean Group of Companies - India
- Bukit Makmur.PT - Indonesia
- Economic Council, Georgia
- The University of Queensland
- Straits Asia Resources Limited - Singapore
- Orica Australia Pty. Ltd.
- Essar Steel Hazira Ltd - India
- AsiaOL BioFuels Corp., Philippines
- IHS Mccloskey Coal Group - USA
- Indian Oil Corporation Limited
- Sree Jayajothi Cements Limited - India
- Star Paper Mills Limited - India
- Anglo American - United Kingdom
- Parry Sugars Refinery, India
- Bharathi Cement Corporation - India
- TNB Fuel Sdn Bhd - Malaysia
- Metalloyd Limited - United Kingdom
- Georgia Ports Authority, United States
- CIMB Investment Bank - Malaysia
- Manunggal Multi Energi - Indonesia
- SMG Consultants - Indonesia
- Edison Trading Spa - Italy
- Grasim Industreis Ltd - India
- Bhushan Steel Limited - India
- Bukit Baiduri Energy - Indonesia
- Meralco Power Generation, Philippines
- IEA Clean Coal Centre - UK
- Indian Energy Exchange, India
- Kobexindo Tractors - Indoneisa
- Videocon Industries ltd - India
- Planning Commission, India
- Singapore Mercantile Exchange
- Carbofer General Trading SA - India
- Vizag Seaport Private Limited - India
- Tata Chemicals Ltd - India
- Riau Bara Harum - Indonesia
- Power Finance Corporation Ltd., India
- Semirara Mining Corp, Philippines
- Savvy Resources Ltd - HongKong
- New Zealand Coal & Carbon
- Latin American Coal - Colombia
- Bangladesh Power Developement Board
- PTC India Limited - India
- Meenaskhi Energy Private Limited - India
- Barasentosa Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Eastern Energy - Thailand
- Bulk Trading Sa - Switzerland
- Energy Link Ltd, New Zealand
- Marubeni Corporation - India
- Binh Thuan Hamico - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- VISA Power Limited - India
- Standard Chartered Bank - UAE
- Sarangani Energy Corporation, Philippines
- Commonwealth Bank - Australia
- Indonesian Coal Mining Association
- Kaltim Prima Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Vedanta Resources Plc - India
- Sindya Power Generating Company Private Ltd
- Oldendorff Carriers - Singapore
- Coal and Oil Company - UAE
- Coastal Gujarat Power Limited - India
- Bhatia International Limited - India
- GMR Energy Limited - India
- Therma Luzon, Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- MS Steel International - UAE
- Mercuria Energy - Indonesia
- Indika Energy - Indonesia
- GVK Power & Infra Limited - India
- Africa Commodities Group - South Africa
- Simpson Spence & Young - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Makarim & Taira - Indonesia
- Intertek Mineral Services - Indonesia
- Ministry of Finance - Indonesia
- Wood Mackenzie - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Maheswari Brothers Coal Limited - India
- ASAPP Information Group - India
- Independent Power Producers Association of India
- Medco Energi Mining Internasional
- PowerSource Philippines DevCo
- Indogreen Group - Indonesia
- Jaiprakash Power Ventures ltd
- Dalmia Cement Bharat India
- Thai Mozambique Logistica
- Mercator Lines Limited - India
- Central Electricity Authority - India
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement PLC, Thailand
- CNBM International Corporation - China
- Electricity Generating Authority of Thailand
- Thiess Contractors Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Petron Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Larsen & Toubro Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Eastern Coal Council - USA
- India Bulls Power Limited - India
- Goldman Sachs - Singapore
- Directorate Of Revenue Intelligence - India
- McConnell Dowell - Australia
- Minerals Council of Australia
- Sakthi Sugars Limited - India
- Global Coal Blending Company Limited - Australia
- Renaissance Capital - South Africa
- Energy Development Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Transport, Egypt
- Uttam Galva Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bhoruka Overseas - Indonesia
- Chamber of Mines of South Africa
- SN Aboitiz Power Inc, Philippines
- Ambuja Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Iligan Light & Power Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Xindia Steels Limited - India
- Banpu Public Company Limited - Thailand
- Mjunction Services Limited - India
- Kepco SPC Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Gujarat Sidhee Cement - India
- Kalimantan Lumbung Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Timah Investasi Mineral - Indoneisa
- ICICI Bank Limited - India
- International Coal Ventures Pvt Ltd - India
- Lanco Infratech Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Mintek Dendrill Indonesia
- SMC Global Power, Philippines
- Wilmar Investment Holdings
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