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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 $887 million annually.
Possible solutions
To strengthen the economy of Eastern Indonesia we will need to improve the regional infrastructure for transportation, specifically through the renovation of ports and airports in strategic cities. Unfortunately, at the moment the fear of losing employment has been on everyone’s mind.
With hindsight being 20/20, in retrospect the government should have prepared a mitigation plan prior to implementing the current regulation. Fear, anxiety and uncertainty have miners and surrounding communities worried. They have no other option but to hope the government steps in and lends a helping hand.
Renegotiations have to be finalized sooner rather than later.
For its part, the government has to be wise if it wants to solve the dispute with those involved. From both a macro and a micro economic perspective, the current mining dispute presents a major obstacle to development in Eastern Indonesia.
Renegotiations should offer a solution that is beneficial for both mining companies and the government in order to ensure that operations can be resumed as soon as possible. And it is crucial that the government prepare a safety net for local communities that depend on mining operations. Finally, a mitigation plan should be included in future mining regulations, specifically one that keeps the welfare of the locals in mind. These steps should be taken quickly if we want to fulfil the promises of our constitution.
Iwan Harsono, a member of the Advisory Board for Economic Resources in West Lombok, is a lecturer in economics at the University of Mataram.
This article was originally published in The Jakarta Globe
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Monday, 11 August 14
INDONESIAN THERMAL COAL SWAPS SEEING SOME POSITIVE TREND
COALspot.com: Indonesian coal swaps for average September 2014 increased US$ 0.20 (+0.36%) day on day and US$ 1.30 (+2.41%) per mt week on week. Th ...
Monday, 11 August 14
SGX CFR SOUTH CHINA COAL SWAPS DIRECTION HEADING TO NORTH
COALspot.com: API 8 CFR South China Coal swap for delivery in September 2014 increased US$ 0.50 (+0.74%) day on day and US$ 1.55 (+2.33%)&nbs ...
Monday, 11 August 14
A TALE OF TWO TRADES - EVA TZIMA
COALspot.com: It has without a doubt been “a cruel, cruel summer” for the Dry Bulk market so far and with second hand values still stan ...
Sunday, 10 August 14
FREIGHT RATES FROM INDONESIA TO INDIA IS EXPECTED TO BE STEADY NEXT WEEK - VISTAAR
COALspot.com: This week the BDI and other segments saw some improvements. The BDI increased by 3.46 pct week on week and closed at 777 points.
...
Friday, 08 August 14
CAPESIZE RATES ARE REMAINING MORE OR LESS UNCHANGED AT BOTTOM LOW LEVELS - FEARNLEYS AS
Handy
An improving sentiment with stronger rates and fair demand for prompt tonnage in the Atlantic, both on the Continent and in the Med for the ...
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- Chamber of Mines of South Africa
- Tamil Nadu electricity Board
- TeaM Sual Corporation - Philippines
- Wood Mackenzie - Singapore
- Coal and Oil Company - UAE
- Cigading International Bulk Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- Central Electricity Authority - India
- Bangladesh Power Developement Board
- VISA Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Timah Investasi Mineral - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GVK Power & Infra Limited - India
- Deloitte Consulting - India
- Bhatia International Limited - India
- Globalindo Alam Lestari - Indonesia
- Georgia Ports Authority, United States
- Standard Chartered Bank - UAE
- Marubeni Corporation - India
- Planning Commission, India
- International Coal Ventures Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Salva Resources Pvt Ltd - India
- Rio Tinto Coal - Australia
- Borneo Indobara - Indonesia
- Indian Oil Corporation Limited
- Independent Power Producers Association of India
- European Bulk Services B.V. - Netherlands
- Kideco Jaya Agung - Indonesia
- Agrawal Coal Company - India
- Kartika Selabumi Mining - Indonesia
- Romanian Commodities Exchange
- Cement Manufacturers Association - India
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- Indika Energy - Indonesia
- Malabar Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Madhucon Powers Ltd - India
- Bhushan Steel Limited - India
- Essar Steel Hazira Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Renaissance Capital - South Africa
- Indonesian Coal Mining Association
- India Bulls Power Limited - India
- IEA Clean Coal Centre - UK
- Siam City Cement - Thailand
- Jorong Barutama Greston.PT - Indonesia
- ICICI Bank Limited - India
- Makarim & Taira - Indonesia
- Merrill Lynch Commodities Europe
- SN Aboitiz Power Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Straits Asia Resources Limited - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ambuja Cements Ltd - India
- London Commodity Brokers - England
- Ceylon Electricity Board - Sri Lanka
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement PLC, Thailand
- ASAPP Information Group - India
- Star Paper Mills Limited - India
- Global Coal Blending Company Limited - Australia
- Goldman Sachs - Singapore
- Manunggal Multi Energi - Indonesia
- Eastern Coal Council - USA
- Orica Mining Services - Indonesia
- CIMB Investment Bank - Malaysia
- MS Steel International - UAE
- Savvy Resources Ltd - HongKong
- Dalmia Cement Bharat India
- TNB Fuel Sdn Bhd - Malaysia
- Kalimantan Lumbung Energi - Indonesia
- Grasim Industreis Ltd - India
- Petron Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Maheswari Brothers Coal Limited - India
- Vedanta Resources Plc - India
- McConnell Dowell - Australia
- Meralco Power Generation, Philippines
- Tata Chemicals Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Vizag Seaport Private Limited - India
- Aditya Birla Group - India
- The University of Queensland
- Rashtriya Ispat Nigam Limited - India
- Trasteel International SA, Italy
- Orica Australia Pty. Ltd.
- Latin American Coal - Colombia
- AsiaOL BioFuels Corp., Philippines
- Medco Energi Mining Internasional
- Ministry of Transport, Egypt
- PTC India Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Economic Council, Georgia
- Wilmar Investment Holdings
- Sical Logistics Limited - India
- OPG Power Generation Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Barasentosa Lestari - Indonesia
- Indogreen Group - Indonesia
- Africa Commodities Group - South Africa
- Bhoruka Overseas - Indonesia
- SMG Consultants - Indonesia
- White Energy Company Limited
- Electricity Generating Authority of Thailand
- San Jose City I Power Corp, Philippines
- Parry Sugars Refinery, India
- Jaiprakash Power Ventures ltd
- Indian Energy Exchange, India
- Semirara Mining Corp, Philippines
- Antam Resourcindo - Indonesia
- SMC Global Power, Philippines
- Toyota Tsusho Corporation, Japan
- Xindia Steels Limited - India
- Edison Trading Spa - Italy
- Central Java Power - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Australian Commodity Traders Exchange
- Binh Thuan Hamico - Vietnam
- Aboitiz Power Corporation - Philippines
- Posco Energy - South Korea
- Kapuas Tunggal Persada - Indonesia
- Simpson Spence & Young - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Attock Cement Pakistan Limited
- Karbindo Abesyapradhi - Indoneisa
- Videocon Industries ltd - India
- Mercuria Energy - Indonesia
- Ministry of Finance - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Mintek Dendrill Indonesia
- Sarangani Energy Corporation, Philippines
- Thiess Contractors Indonesia
- Karaikal Port Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Interocean Group of Companies - India
- Heidelberg Cement - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Price Waterhouse Coopers - Russia
- Singapore Mercantile Exchange
- Sojitz Corporation - Japan
- PowerSource Philippines DevCo
- Bukit Makmur.PT - Indonesia
- Electricity Authority, New Zealand
- Kaltim Prima Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CNBM International Corporation - China
- The Treasury - Australian Government
- Coalindo Energy - Indonesia
- The State Trading Corporation of India Ltd
- Riau Bara Harum - Indonesia
- GAC Shipping (India) Pvt Ltd
- Metalloyd Limited - United Kingdom
- Australian Coal Association
- Energy Development Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Mines - Canada
- GMR Energy Limited - India
- Thai Mozambique Logistica
- Anglo American - United Kingdom
- IHS Mccloskey Coal Group - USA
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- Coastal Gujarat Power Limited - India
- Parliament of New Zealand
- Banpu Public Company Limited - Thailand
- Lanco Infratech Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sree Jayajothi Cements Limited - India
- Intertek Mineral Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- New Zealand Coal & Carbon
- Leighton Contractors Pty Ltd - Australia
- Carbofer General Trading SA - India
- Alfred C Toepfer International GmbH - Germany
- Meenaskhi Energy Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- PNOC Exploration Corporation - Philippines
- Kumho Petrochemical, South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
- Gujarat Sidhee Cement - India
- Kobexindo Tractors - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- Sakthi Sugars Limited - India
- Baramulti Group, Indonesia
- Ind-Barath Power Infra Limited - India
- Commonwealth Bank - Australia
- Mjunction Services Limited - India
- Bukit Baiduri Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Directorate Of Revenue Intelligence - India
- Formosa Plastics Group - Taiwan
- Energy Link Ltd, New Zealand
- Chettinad Cement Corporation Ltd - India
- Oldendorff Carriers - Singapore
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- Larsen & Toubro Limited - India
- Mercator Lines Limited - India
- Jindal Steel & Power Ltd - India
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