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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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Sunday, 03 August 14
LACK OF COAL SHIPMENTS FROM FAR EAST/SE ASIA, THE PRESSURE ON CHARTER RATES CONTINUED THIS WEEK
COALspot.com: This week, the freight rates were almost flat as charter rates were also almost steady from last week.
The BDI was up by 2.59 pc ...
Friday, 01 August 14
UNCERTAINTY IN ASIAN COAL MARKETS WHERE INDEX-LINKED PRICING DOMINATES - SGX
COALspot.com: In the past 3 years, seaborne thermal coal markets have been in a state of constant oversupply.
Reuters expects this oversupply ...
Friday, 01 August 14
U.S PRODUCED 19.4 MMST OF COAL IN A WEEK, SAYS EIA
COALspot.com – United States the world's second largest coal producer, produced approximately 19.40 million short tons (mmst) of coal in ...
Thursday, 31 July 14
CAPESIZE: CARGO VOLUMES, COAL IN PARTICULAR, PRESENTLY NOT SUFFICIENT TO EMPLOY A GROWING FLEET - FERNLEYS
Handy
Both the Atlantic and Pacific has improved in the supramax segment over the last week, said Fernleys in Its latest weekly report . There we ...
Thursday, 31 July 14
RIO TINTO SELLS MOZAMBIQUE COAL ASSETS FOR US$ 50 MILLION TO INDIA'S ICVL
COALspot.com: Rio Tinto has agreed to sell its Mozambique coal assets for just US$ 50 million to International coal ventures Private limited of Ind ...
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- Metalloyd Limited - United Kingdom
- Timah Investasi Mineral - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PNOC Exploration Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Sindya Power Generating Company Private Ltd
- New Zealand Coal & Carbon
- GMR Energy Limited - India
- Kartika Selabumi Mining - Indonesia
- Orica Australia Pty. Ltd.
- MS Steel International - UAE
- Australian Commodity Traders Exchange
- Pendopo Energi Batubara - Indonesia
- Madhucon Powers Ltd - India
- Cement Manufacturers Association - India
- Vijayanagar Sugar Pvt Ltd - India
- Mjunction Services Limited - India
- Indian Energy Exchange, India
- McConnell Dowell - Australia
- The University of Queensland
- Rashtriya Ispat Nigam Limited - India
- Cigading International Bulk Terminal - Indonesia
- CNBM International Corporation - China
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Development Corp, Philippines
- Baramulti Group, Indonesia
- London Commodity Brokers - England
- Siam City Cement PLC, Thailand
- Krishnapatnam Port Company Ltd. - India
- Billiton Holdings Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Ministry of Finance - Indonesia
- Toyota Tsusho Corporation, Japan
- Maheswari Brothers Coal Limited - India
- Gujarat Sidhee Cement - India
- Attock Cement Pakistan Limited
- Thai Mozambique Logistica
- Bulk Trading Sa - Switzerland
- Global Coal Blending Company Limited - Australia
- Antam Resourcindo - Indonesia
- Grasim Industreis Ltd - India
- ASAPP Information Group - India
- Bangladesh Power Developement Board
- Barasentosa Lestari - Indonesia
- Malabar Cements Ltd - India
- Deloitte Consulting - India
- Straits Asia Resources Limited - Singapore
- Jindal Steel & Power Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- IEA Clean Coal Centre - UK
- San Jose City I Power Corp, Philippines
- Merrill Lynch Commodities Europe
- Bukit Makmur.PT - Indonesia
- Mintek Dendrill Indonesia
- Meenaskhi Energy Private Limited - India
- Sical Logistics Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Mercuria Energy - Indonesia
- Georgia Ports Authority, United States
- Siam City Cement - Thailand
- Savvy Resources Ltd - HongKong
- Directorate General of MIneral and Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bukit Baiduri Energy - Indonesia
- Parliament of New Zealand
- Australian Coal Association
- Makarim & Taira - Indonesia
- Ambuja Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Electricity Authority, New Zealand
- Indo Tambangraya Megah - Indonesia
- Sree Jayajothi Cements Limited - India
- The Treasury - Australian Government
- Jorong Barutama Greston.PT - Indonesia
- Leighton Contractors Pty Ltd - Australia
- ICICI Bank Limited - India
- Power Finance Corporation Ltd., India
- Xindia Steels Limited - India
- Eastern Coal Council - USA
- Kepco SPC Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Ministry of Transport, Egypt
- Meralco Power Generation, Philippines
- Commonwealth Bank - Australia
- Essar Steel Hazira Ltd - India
- Sakthi Sugars Limited - India
- Miang Besar Coal Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Electricity Generating Authority of Thailand
- Samtan Co., Ltd - South Korea
- IHS Mccloskey Coal Group - USA
- Medco Energi Mining Internasional
- Banpu Public Company Limited - Thailand
- The State Trading Corporation of India Ltd
- Ministry of Mines - Canada
- Thiess Contractors Indonesia
- Wilmar Investment Holdings
- Interocean Group of Companies - India
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Simpson Spence & Young - Indonesia
- Africa Commodities Group - South Africa
- Indogreen Group - Indonesia
- Coastal Gujarat Power Limited - India
- Romanian Commodities Exchange
- Anglo American - United Kingdom
- Bhoruka Overseas - Indonesia
- Singapore Mercantile Exchange
- India Bulls Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Vizag Seaport Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Ind-Barath Power Infra Limited - India
- PTC India Limited - India
- Borneo Indobara - Indonesia
- Tata Chemicals Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aditya Birla Group - India
- GAC Shipping (India) Pvt Ltd
- Altura Mining Limited, Indonesia
- Intertek Mineral Services - Indonesia
- Petron Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Bayan Resources Tbk. - Indonesia
- Minerals Council of Australia
- Eastern Energy - Thailand
- TeaM Sual Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Uttam Galva Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Indian Oil Corporation Limited
- Kapuas Tunggal Persada - Indonesia
- European Bulk Services B.V. - Netherlands
- Star Paper Mills Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Globalindo Alam Lestari - Indonesia
- Tamil Nadu electricity Board
- Aboitiz Power Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Bharathi Cement Corporation - India
- SMG Consultants - Indonesia
- Posco Energy - South Korea
- Videocon Industries ltd - India
- Oldendorff Carriers - Singapore
- Standard Chartered Bank - UAE
- Chamber of Mines of South Africa
- Central Electricity Authority - India
- PowerSource Philippines DevCo
- Bahari Cakrawala Sebuku - Indonesia
- Parry Sugars Refinery, India
- Holcim Trading Pte Ltd - Singapore
- VISA Power Limited - India
- GVK Power & Infra Limited - India
- Coal and Oil Company - UAE
- Goldman Sachs - Singapore
- Kobexindo Tractors - Indoneisa
- Coalindo Energy - Indonesia
- White Energy Company Limited
- Heidelberg Cement - Germany
- Global Business Power Corporation, Philippines
- Mercator Lines Limited - India
- Indika Energy - Indonesia
- Dalmia Cement Bharat India
- Gujarat Mineral Development Corp Ltd - India
- Larsen & Toubro Limited - India
- South Luzon Thermal Energy Corporation
- Wood Mackenzie - Singapore
- AsiaOL BioFuels Corp., Philippines
- Agrawal Coal Company - India
- SMC Global Power, Philippines
- Binh Thuan Hamico - Vietnam
- Central Java Power - Indonesia
- Independent Power Producers Association of India
- Jaiprakash Power Ventures ltd
- Rio Tinto Coal - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Ceylon Electricity Board - Sri Lanka
- Sinarmas Energy and Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Economic Council, Georgia
- CIMB Investment Bank - Malaysia
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- Latin American Coal - Colombia
- Indonesian Coal Mining Association
- Marubeni Corporation - India
- Alfred C Toepfer International GmbH - Germany
- Trasteel International SA, Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhatia International Limited - India
- Planning Commission, India
- Vedanta Resources Plc - India
- LBH Netherlands Bv - Netherlands
- Riau Bara Harum - Indonesia
- Carbofer General Trading SA - India
- Port Waratah Coal Services - Australia
- Iligan Light & Power Inc, Philippines
- Edison Trading Spa - Italy
- Renaissance Capital - South Africa
- Lanco Infratech Ltd - India
- Sojitz Corporation - Japan
- Salva Resources Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhushan Steel Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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