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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 $887 million annually.
Possible solutions
To strengthen the economy of Eastern Indonesia we will need to improve the regional infrastructure for transportation, specifically through the renovation of ports and airports in strategic cities. Unfortunately, at the moment the fear of losing employment has been on everyone’s mind.
With hindsight being 20/20, in retrospect the government should have prepared a mitigation plan prior to implementing the current regulation. Fear, anxiety and uncertainty have miners and surrounding communities worried. They have no other option but to hope the government steps in and lends a helping hand.
Renegotiations have to be finalized sooner rather than later.
For its part, the government has to be wise if it wants to solve the dispute with those involved. From both a macro and a micro economic perspective, the current mining dispute presents a major obstacle to development in Eastern Indonesia.
Renegotiations should offer a solution that is beneficial for both mining companies and the government in order to ensure that operations can be resumed as soon as possible. And it is crucial that the government prepare a safety net for local communities that depend on mining operations. Finally, a mitigation plan should be included in future mining regulations, specifically one that keeps the welfare of the locals in mind. These steps should be taken quickly if we want to fulfil the promises of our constitution.
Iwan Harsono, a member of the Advisory Board for Economic Resources in West Lombok, is a lecturer in economics at the University of Mataram.
This article was originally published in The Jakarta Globe
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Thursday, 14 August 14
INDIA'S PLAN TO START AN INFRASTRUCTURE BOOM AND TO INVEST US$ 1 TRILLION BY 2017 WILL SURELY AFFECT THE DRY BULK TRADE - FEARNLEYS
Handy
The Atlantic Supra market has continued its improving sentiment with rates climbing and TA´s are now up about US$ 900 w-o-w, said Fea ...
Wednesday, 13 August 14
WEEKLY MARKET INSIGHT - KONSTANTINOS KONTOMICHIS SNP BROKER
Being at the peak of the holiday season, August is, as usual, the quietest month in terms of snp transactions, yet it is also a time very critical ...
Wednesday, 13 August 14
WHAT DOES PROJECT CARGO REALLY MEAN TO INSURERS?
KNOWLEDGE TO ELEVATE
Richard Kamppari-Baker, claims manager of FP Marine Risks, explains the challenges of project cargo risk assessment from ...
Wednesday, 13 August 14
INDONESIAN COAL PRICE REFERENCE FALL AGAIN CLOSE TO 57 MONTHS LOWS
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down the coal bench mark price in August. HBA for the month of A ...
Monday, 11 August 14
LARGEST CHINESE TRADE SURPLUS EVER RECORDED IN JULY - BIMCO
China recorded a trade surplus of USD 47.3 billion in July 2014. The record high surplus came on the back of very strong export growth while import ...
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- CNBM International Corporation - China
- Coalindo Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Chettinad Cement Corporation Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Deloitte Consulting - India
- Latin American Coal - Colombia
- Orica Mining Services - Indonesia
- Jaiprakash Power Ventures ltd
- Power Finance Corporation Ltd., India
- Thai Mozambique Logistica
- Mintek Dendrill Indonesia
- Agrawal Coal Company - India
- Bhatia International Limited - India
- Renaissance Capital - South Africa
- Global Business Power Corporation, Philippines
- Videocon Industries ltd - India
- Globalindo Alam Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Bulk Trading Sa - Switzerland
- Bhushan Steel Limited - India
- Dalmia Cement Bharat India
- MS Steel International - UAE
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Gujarat Sidhee Cement - India
- Parry Sugars Refinery, India
- PNOC Exploration Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petron Corporation, Philippines
- Eastern Energy - Thailand
- Cement Manufacturers Association - India
- Jindal Steel & Power Ltd - India
- Posco Energy - South Korea
- Straits Asia Resources Limited - Singapore
- GAC Shipping (India) Pvt Ltd
- Kobexindo Tractors - Indoneisa
- Australian Coal Association
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Aboitiz Power Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Miang Besar Coal Terminal - Indonesia
- Interocean Group of Companies - India
- Intertek Mineral Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Oldendorff Carriers - Singapore
- Bukit Makmur.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Timah Investasi Mineral - Indoneisa
- Meralco Power Generation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Sojitz Corporation - Japan
- Central Electricity Authority - India
- Energy Link Ltd, New Zealand
- Planning Commission, India
- Bhoruka Overseas - Indonesia
- Siam City Cement PLC, Thailand
- Carbofer General Trading SA - India
- Electricity Authority, New Zealand
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Indonesian Coal Mining Association
- Altura Mining Limited, Indonesia
- South Luzon Thermal Energy Corporation
- The University of Queensland
- Kapuas Tunggal Persada - Indonesia
- Sarangani Energy Corporation, Philippines
- Mjunction Services Limited - India
- Mercator Lines Limited - India
- Leighton Contractors Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Pendopo Energi Batubara - Indonesia
- Malabar Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- Heidelberg Cement - Germany
- Karbindo Abesyapradhi - Indoneisa
- Coal and Oil Company - UAE
- Independent Power Producers Association of India
- Sinarmas Energy and Mining - Indonesia
- Kumho Petrochemical, South Korea
- Xindia Steels Limited - India
- GMR Energy Limited - India
- OPG Power Generation Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Parliament of New Zealand
- Indian Oil Corporation Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement - Thailand
- Maheswari Brothers Coal Limited - India
- Alfred C Toepfer International GmbH - Germany
- Orica Australia Pty. Ltd.
- Price Waterhouse Coopers - Russia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Australian Commodity Traders Exchange
- Lanco Infratech Ltd - India
- Africa Commodities Group - South Africa
- Kepco SPC Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Edison Trading Spa - Italy
- AsiaOL BioFuels Corp., Philippines
- New Zealand Coal & Carbon
- Commonwealth Bank - Australia
- Thiess Contractors Indonesia
- Economic Council, Georgia
- Attock Cement Pakistan Limited
- Tamil Nadu electricity Board
- Iligan Light & Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- SMC Global Power, Philippines
- Indogreen Group - Indonesia
- The Treasury - Australian Government
- Star Paper Mills Limited - India
- European Bulk Services B.V. - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Goldman Sachs - Singapore
- Grasim Industreis Ltd - India
- Marubeni Corporation - India
- PTC India Limited - India
- Wilmar Investment Holdings
- Anglo American - United Kingdom
- Mercuria Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- IEA Clean Coal Centre - UK
- Singapore Mercantile Exchange
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Transport, Egypt
- Holcim Trading Pte Ltd - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Kaltim Prima Coal - Indonesia
- Riau Bara Harum - Indonesia
- Sindya Power Generating Company Private Ltd
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- London Commodity Brokers - England
- Maharashtra Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- ASAPP Information Group - India
- PowerSource Philippines DevCo
- TeaM Sual Corporation - Philippines
- Tata Chemicals Ltd - India
- Bharathi Cement Corporation - India
- Medco Energi Mining Internasional
- Banpu Public Company Limited - Thailand
- Semirara Mining Corp, Philippines
- Energy Development Corp, Philippines
- CIMB Investment Bank - Malaysia
- McConnell Dowell - Australia
- Indika Energy - Indonesia
- Electricity Generating Authority of Thailand
- Bukit Baiduri Energy - Indonesia
- Ministry of Mines - Canada
- Eastern Coal Council - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GVK Power & Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Global Coal Blending Company Limited - Australia
- Sakthi Sugars Limited - India
- SMG Consultants - Indonesia
- ICICI Bank Limited - India
- Cigading International Bulk Terminal - Indonesia
- Ministry of Finance - Indonesia
- Madhucon Powers Ltd - India
- Aditya Birla Group - India
- Georgia Ports Authority, United States
- SN Aboitiz Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Sree Jayajothi Cements Limited - India
- Formosa Plastics Group - Taiwan
- VISA Power Limited - India
- Salva Resources Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- International Coal Ventures Pvt Ltd - India
- Sical Logistics Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ambuja Cements Ltd - India
- Standard Chartered Bank - UAE
- San Jose City I Power Corp, Philippines
- Simpson Spence & Young - Indonesia
- Kartika Selabumi Mining - Indonesia
- Central Java Power - Indonesia
- Vedanta Resources Plc - India
- Savvy Resources Ltd - HongKong
- GN Power Mariveles Coal Plant, Philippines
- Krishnapatnam Port Company Ltd. - India
- Larsen & Toubro Limited - India
- Indian Energy Exchange, India
- Toyota Tsusho Corporation, Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Trasteel International SA, Italy
- Global Green Power PLC Corporation, Philippines
- Antam Resourcindo - Indonesia
- Romanian Commodities Exchange
- Coastal Gujarat Power Limited - India
- IHS Mccloskey Coal Group - USA
- Ceylon Electricity Board - Sri Lanka
- Wood Mackenzie - Singapore
- Rio Tinto Coal - Australia
- Barasentosa Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Semirara Mining and Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
- Borneo Indobara - Indonesia
- LBH Netherlands Bv - Netherlands
- Chamber of Mines of South Africa
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