Indonesia ore export ban: 570,000 lose jobs

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MinersIndonesia’s controversial decision to ban exports of unprocessed minerals is triggering unintended but predictable consequences, as about 570,000 mining workers are losing their job.

On January 12, 2014, Jakarta announced new regulations banning the export of mineral ores as part of efforts to keep a greater share of resource profits in the country, one of the world’s biggest producers of minerals such as copper, gold and nickel. But a month after the ban was imposed, more than 570,000 people working in the mining industry have been left without work as companies halted operations, said Juan Forty Silalahi, spokesman for the National Mining Workers Solidarity lobby group.

“The number will continue to increase unless the government reviews the ban,” Silalahi said.

“Small businesses are paralysed,” he said. “People selling goods to workers, residents who rent out their places and relatives who depend on them are also affected.”

Companies and industry experts had warned that the ban, mandated by a law adopted in 2009, would trigger mass layoffs and reduce export revenues at the time when the economy is showing signs of a slowdown. The regulations require companies to process raw materials domestically to produce outputs of higher value, but industry players argue that building smelters is not economically viable because it needs large investment.

The biggest foreign mining companies operating in Indonesia, Freeport McMoRan Copper & Gold Inc and Newmont Mining Corp, were granted a temporary reprieve, but they complained that a new export tax of 25 per cent for metal concentrates was a big burden and warned that they might have to lay off thousands of workers.

The export tax for metal concentrates rose from 20 to 25 per cent and will gradually go up to 60 per cent by the end of 2016.

Energy and Mineral Resources Ministry spokesman Saleh Abdurrahman said the ban would be good for Indonesia in the long term.

“Revenues generated by concentrate exports were very small,” he said “After they were processed overseas, we imported them back at higher costs. This is not fair.”

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Reading Time: 2 minutes

Indonesia’s controversial decision to ban exports of unprocessed minerals is triggering unintended but predictable consequences, as about 570,000 mining workers are losing their job.

Reading Time: 2 minutes

MinersIndonesia’s controversial decision to ban exports of unprocessed minerals is triggering unintended but predictable consequences, as about 570,000 mining workers are losing their job.

On January 12, 2014, Jakarta announced new regulations banning the export of mineral ores as part of efforts to keep a greater share of resource profits in the country, one of the world’s biggest producers of minerals such as copper, gold and nickel. But a month after the ban was imposed, more than 570,000 people working in the mining industry have been left without work as companies halted operations, said Juan Forty Silalahi, spokesman for the National Mining Workers Solidarity lobby group.

“The number will continue to increase unless the government reviews the ban,” Silalahi said.

“Small businesses are paralysed,” he said. “People selling goods to workers, residents who rent out their places and relatives who depend on them are also affected.”

Companies and industry experts had warned that the ban, mandated by a law adopted in 2009, would trigger mass layoffs and reduce export revenues at the time when the economy is showing signs of a slowdown. The regulations require companies to process raw materials domestically to produce outputs of higher value, but industry players argue that building smelters is not economically viable because it needs large investment.

The biggest foreign mining companies operating in Indonesia, Freeport McMoRan Copper & Gold Inc and Newmont Mining Corp, were granted a temporary reprieve, but they complained that a new export tax of 25 per cent for metal concentrates was a big burden and warned that they might have to lay off thousands of workers.

The export tax for metal concentrates rose from 20 to 25 per cent and will gradually go up to 60 per cent by the end of 2016.

Energy and Mineral Resources Ministry spokesman Saleh Abdurrahman said the ban would be good for Indonesia in the long term.

“Revenues generated by concentrate exports were very small,” he said “After they were processed overseas, we imported them back at higher costs. This is not fair.”

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