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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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- Romanian Commodities Exchange
- Bayan Resources Tbk. - Indonesia
- Pendopo Energi Batubara - Indonesia
- Carbofer General Trading SA - India
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- The State Trading Corporation of India Ltd
- McConnell Dowell - Australia
- Indonesian Coal Mining Association
- Chamber of Mines of South Africa
- Semirara Mining and Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Standard Chartered Bank - UAE
- Renaissance Capital - South Africa
- Interocean Group of Companies - India
- Parry Sugars Refinery, India
- Indika Energy - Indonesia
- Bhatia International Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- Planning Commission, India
- Sarangani Energy Corporation, Philippines
- Coal and Oil Company - UAE
- Directorate Of Revenue Intelligence - India
- Deloitte Consulting - India
- Orica Mining Services - Indonesia
- Electricity Generating Authority of Thailand
- London Commodity Brokers - England
- New Zealand Coal & Carbon
- Sindya Power Generating Company Private Ltd
- Bhushan Steel Limited - India
- Miang Besar Coal Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- PTC India Limited - India
- Africa Commodities Group - South Africa
- VISA Power Limited - India
- Cement Manufacturers Association - India
- White Energy Company Limited
- Attock Cement Pakistan Limited
- Aditya Birla Group - India
- Ministry of Finance - Indonesia
- Ind-Barath Power Infra Limited - India
- Thiess Contractors Indonesia
- Central Java Power - Indonesia
- Indogreen Group - Indonesia
- AsiaOL BioFuels Corp., Philippines
- The Treasury - Australian Government
- Parliament of New Zealand
- ICICI Bank Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- European Bulk Services B.V. - Netherlands
- Agrawal Coal Company - India
- Gujarat Sidhee Cement - India
- Meralco Power Generation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Kaltim Prima Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Toyota Tsusho Corporation, Japan
- Bangladesh Power Developement Board
- Ceylon Electricity Board - Sri Lanka
- Vedanta Resources Plc - India
- Australian Coal Association
- Vijayanagar Sugar Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Georgia Ports Authority, United States
- Kohat Cement Company Ltd. - Pakistan
- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- SMG Consultants - Indonesia
- Heidelberg Cement - Germany
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Billiton Holdings Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Coalindo Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Anglo American - United Kingdom
- Antam Resourcindo - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Mercuria Energy - Indonesia
- The University of Queensland
- Madhucon Powers Ltd - India
- Commonwealth Bank - Australia
- Samtan Co., Ltd - South Korea
- Mjunction Services Limited - India
- Oldendorff Carriers - Singapore
- Aboitiz Power Corporation - Philippines
- Marubeni Corporation - India
- Ministry of Mines - Canada
- Iligan Light & Power Inc, Philippines
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- Global Coal Blending Company Limited - Australia
- MS Steel International - UAE
- Neyveli Lignite Corporation Ltd, - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CIMB Investment Bank - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Eastern Energy - Thailand
- Baramulti Group, Indonesia
- Singapore Mercantile Exchange
- Grasim Industreis Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Minerals Council of Australia
- Eastern Coal Council - USA
- Lanco Infratech Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Oil Corporation Limited
- Kalimantan Lumbung Energi - Indonesia
- Xindia Steels Limited - India
- IEA Clean Coal Centre - UK
- Uttam Galva Steels Limited - India
- Simpson Spence & Young - Indonesia
- Bharathi Cement Corporation - India
- LBH Netherlands Bv - Netherlands
- Videocon Industries ltd - India
- Power Finance Corporation Ltd., India
- Intertek Mineral Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Metalloyd Limited - United Kingdom
- Petron Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- GVK Power & Infra Limited - India
- Timah Investasi Mineral - Indoneisa
- San Jose City I Power Corp, Philippines
- Malabar Cements Ltd - India
- Orica Australia Pty. Ltd.
- Sakthi Sugars Limited - India
- Salva Resources Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Central Electricity Authority - India
- Savvy Resources Ltd - HongKong
- Bhoruka Overseas - Indonesia
- GMR Energy Limited - India
- Medco Energi Mining Internasional
- Manunggal Multi Energi - Indonesia
- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- Trasteel International SA, Italy
- Ambuja Cements Ltd - India
- Thai Mozambique Logistica
- TNB Fuel Sdn Bhd - Malaysia
- Price Waterhouse Coopers - Russia
- Pipit Mutiara Jaya. PT, Indonesia
- Mintek Dendrill Indonesia
- Barasentosa Lestari - Indonesia
- Coastal Gujarat Power Limited - India
- Sree Jayajothi Cements Limited - India
- Siam City Cement PLC, Thailand
- PowerSource Philippines DevCo
- Karaikal Port Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- OPG Power Generation Pvt Ltd - India
- Tata Chemicals Ltd - India
- Sojitz Corporation - Japan
- Port Waratah Coal Services - Australia
- Kobexindo Tractors - Indoneisa
- Latin American Coal - Colombia
- Electricity Authority, New Zealand
- Makarim & Taira - Indonesia
- Jindal Steel & Power Ltd - India
- Maheswari Brothers Coal Limited - India
- India Bulls Power Limited - India
- Riau Bara Harum - Indonesia
- Wood Mackenzie - Singapore
- Tamil Nadu electricity Board
- Larsen & Toubro Limited - India
- Sical Logistics Limited - India
- ASAPP Information Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Global Green Power PLC Corporation, Philippines
- Goldman Sachs - Singapore
- Banpu Public Company Limited - Thailand
- Merrill Lynch Commodities Europe
- Indian Energy Exchange, India
- Kumho Petrochemical, South Korea
- Indo Tambangraya Megah - Indonesia
- Edison Trading Spa - Italy
- Ministry of Transport, Egypt
- Altura Mining Limited, Indonesia
- Jaiprakash Power Ventures ltd
- Siam City Cement - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Sinarmas Energy and Mining - Indonesia
- Kartika Selabumi Mining - Indonesia
- Vizag Seaport Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Star Paper Mills Limited - India
- Economic Council, Georgia
- Dalmia Cement Bharat India
- Globalindo Alam Lestari - Indonesia
- Wilmar Investment Holdings
- Binh Thuan Hamico - Vietnam
- Therma Luzon, Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Semirara Mining Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Global Business Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Posco Energy - South Korea
- South Luzon Thermal Energy Corporation
- Bulk Trading Sa - Switzerland
- Meenaskhi Energy Private Limited - India
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