Engineering & Mining Journal

APR 2017

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2 E&MJ • APRIL 2017 FROM THE EDITOR In mid-March, Agence France-Presse (AFP) posted an ar- ticle, "Jakarta Mining Policy Shift Sparks Turmoil," which was picked up by most of the wire services, especially the local news outlets in Indonesia. As far as mining pieces in the mainstream press go, it was fair. It documented Indone- sia's about-face on its mineral exports, saying it is creating another headache for mining companies struggling to work with the country. That policy change has led to a standoff with one of its biggest partners in the mining business, Freeport-McMoRan. At the beginning of the year, Indonesia relaxed a 2014 law, banning ore exports. While trying to spur domestic smelting, Indonesia discov- ered it had shot itself in the foot when the mines began to close. Jobs disappeared along with mining-related tax revenue. The article also explained that, while some fi rms stood to benefi t from the rollback, the companies that invested billions in Indonesian smelting operations are angry to say the least. The article caught the attention of Indonesian Ministry of Energy and Mineral Resources' and they responded, saying the headline was misleading and that the article discredits the government of Indonesia. What follows is an edited version of the ministry's explanation of the situation: The ministry claimed that the government of Indonesia has been "consistent" in supporting added-value for metallic minerals in domestic downstream pro- cessing, in line with Law No. 4 of 2009 on Mineral and Coal Mining (Law 4/2009) and Government Regulation No. 1 of 2017 (GR 1/2017), the fol- low-up and revision to previously issued regulations. The ministry said Indo- nesia respects the content of any previous mining agreement. If the Contract of Work (CoW) holders conduct downstream processing within fi ve years of Law 4/2009 promulgating, they may continue their business and are not required to convert the CoW to a Mining Business Permit (IUP). In cases where CoW holders have not conducted downstream processing as referred to in Law 4/2009, Indonesia offers to convert the CoW into a conditional IUP. According to Law 4/2009, Articles 102 & 103, IUP holders are permitted to export concentrate but must construct a processing or smelting facility within fi ve years of the promulgation of GR 1/2017. Progress in smelter construction will be verifi ed independently every six months; if progress within 5 years has not reached 90% of plan, the export permit will be repealed. The most important principle, according to the Ministry, is maintaining justice for the people of Indonesia as absolute owner of the mineral wealth, as mandated in the divestment obligation of the IUP contract. Sometimes, the truth hurts. Obviously, the article struck a chord with the minis- try. The reality as the ministry admits is for seven years Indonesia has lacked consis- tency with its policy toward mining. The government has raised taxes and royalties and is now demanding that multinational mining companies give them a 51% in- terest in their Indonesian operations. Even after that long-winded explanation, min- istry offi cials were bold enough to say they still think they can grow mining-related revenue by $3 billion in the next fi ve years. A successful nationalization plan should be an uphill climb where the country earns its stake in the mining companies rather than demanding it. Indonesia's politicians are learning. Unfortunately, its society is paying the price as investment dollars fl ee to other markets. The Truth Hurts In mid-March, Agence France-Presse (AFP) posted an ar- ticle, "Jakarta Mining Policy Shift Sparks Turmoil," which was picked up by most of the wire services, especially the local news outlets in Indonesia. As far as mining pieces in the mainstream press go, it was fair. It documented Indone- sia's about-face on its mineral exports, saying it is creating another headache for mining companies struggling to work with the country. That policy change has led to a standoff with one of its biggest partners in the mining business, Steve Fiscor Publisher & Editor-in-Chief Steve Fiscor, Publisher & Editor-in-Chief sfi scor@mining-media.com Mining Media International, Inc. 11655 Central Parkway, Suite 306; Jacksonville, Florida 32224 USA Phone: +1.904.721.2925 / Fax: +1.904.721.2930 Editorial Publisher & Editor-In-Chief—Steve Fiscor, sfi scor@mining-media.com Associate Editor—Jennifer Jensen, jjensen@mining-media.com Technical Writer—Jesse Morton, jmorton@mining-media.com Contributing Editor—Russ Carter, rcarter@mining-media.com European Editor—Simon Walker, simon.emj@btinternet.com Latin American Editor—Oscar Martinez, omartinez@mining-media.com South African Editor—Gavin du Venage, gavinduvenage@gmail.com Graphic Designer—Tad Seabrook, tseabrook@mining-media.com Sales Midwest/Eastern U.S. & Canada, Sales—Victor Matteucci, vmatteucci@mining-media.com Western U.S. & Canada, Sales—Mary Lu Buse, mlbuse@mining-media.com Scandinavia, UK & European Sales—Colm Barry, colm.barry@telia.com Germany, Austria & Switzerland Sales—Gerd Strasmann, info@strasmann-media.de Japan Sales—Masao Ishiguro, ma.ishiguro@w9.dion.ne.jp Production Manager—Dan Fitts, dfi tts@mining-media.com www.e-mj.com Engineering & Mining Journal, Volume 218, Issue 4, (ISSN 0095-8948) is published monthly by Mining Media International, Inc., 11655 Central Parkway, Suite 306, Jacksonville, FL 32224 (mining-media.com). Periodicals Postage paid at Jacksonville, FL, and additional mailing offi ces. Canada Post Publica- tions Mail Agreement No. 40845540. Canada return address: Station A, PO Box 54, Windsor ON N9A 6J5, Email: circulation@mining-media.com. Current and back issues and additional resources, including subscription request forms and an editorial calendar, are available on the World Wide Web at www.e-mj.com. SUBSCRIPTION RATES: Free and controlled circulation to qualifi ed sub- scribers. Non-qualifi ed persons may subscribe at the following rates: USA and Canada, 1 year, $82.00, 2 year, $139.00. Outside the USA and Cana- da, 1 year, $134.00, 2 year, $249.00 surface mail (1 year, $191.00, 2 year, $352.00 airmail delivery). For subscriber services or to order single copies, write to E&MJ, 11655 Central Parkway, Suite 306, Jacksonville, FL 32224 USA; call +1.904.721.2925 (USA) or visit www.mining-media.com. ARCHIVES AND MICROFORM: This magazine is available for research and retrieval of selected archived articles from leading electronic databases and online search services, including Factiva, LexisNexis, and Proquest. For mi- croform availability, contact ProQuest at 800-521-0600 or +1.734.761.4700, or search the Serials in Microform listings at www.proquest.com. POSTMASTER: Send address changes to E&MJ, P.O. Box 1337, Skokie, IL 60076 USA. REPRINTS: Mining Media International, Inc., 11655 Central Parkway, Suite 306, Jacksonville, FL 32224 USA phone: +1.904.721.2925, fax: +1.904.721.2930, www.mining-media.com PHOTOCOPIES: Authorization to photocopy articles for internal corporate, personal, or instructional use may be obtained from the Copyright Clear- ance Center (CCC) at +1.978.750.8400. Obtain further information at copyright.com. EXECUTIVE OFFICE: Mining Media International, Inc., 11655 Central Park- way, Suite 306, Jacksonville, FL 32224 USA phone: +1.904.721.2925, fax: +1.904.721.2930, www.mining-media.com COPYRIGHT 2017: Engineering & Mining Journal, incorporating World Mining Equipment, World Min- ing and Mining Equipment International. ALL RIGHTS RESERVED.

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