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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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Friday, 02 August 24
COAL MARKET DEVELOPMENTS: FALLING PRICES AMID RECORD-HIGH OUTPUT - WORLD BANK
Coal prices inched up in May (m/m) following an 8 percent decline in 2024Q1. The Australian and South African benchmarks have plummeted more ...
Friday, 26 July 24
FUELEU MARITME IS COMING. IS YOUR CHARTERPARTY READY? - GARD
With less than six months to implementation of FuelEU Maritime in EU and EEA trades, there has been little published advice regarding how to alloca ...
Thursday, 04 July 24
INDIA'S COAL PRODUCTION RISES 14% IN JUNE - PTI
The country’s coal production rose by 14.49% to 84.63 million tonne (MT) in June. The country’s coal output was 73.92 MT in June last f ...
Tuesday, 02 July 24
NTPC CAPTIVE COAL OUTPUT GROWS 15% IN Q1; DESPATCH RISES 17%
State-owned NTPC on Monday reported a 15 per cent year-on-year increase in the production of coal from captives mines to 9.862 metric million tonne ...
Friday, 28 June 24
KOSPO INVITED BIDS FOR 400,000 MT OF MINIMUM 4000 NCV COAL FOR FIVE YEARS
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for total 400,000 MT of Low Calorific Value Coal for 5 years starting from July 2024 until ...
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- Indika Energy - Indonesia
- Thiess Contractors Indonesia
- Heidelberg Cement - Germany
- Sinarmas Energy and Mining - Indonesia
- PTC India Limited - India
- Miang Besar Coal Terminal - Indonesia
- Economic Council, Georgia
- Savvy Resources Ltd - HongKong
- Kepco SPC Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Agrawal Coal Company - India
- Directorate Of Revenue Intelligence - India
- Coastal Gujarat Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- McConnell Dowell - Australia
- International Coal Ventures Pvt Ltd - India
- Chamber of Mines of South Africa
- White Energy Company Limited
- Cigading International Bulk Terminal - Indonesia
- ASAPP Information Group - India
- VISA Power Limited - India
- Sarangani Energy Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Rio Tinto Coal - Australia
- Therma Luzon, Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- New Zealand Coal & Carbon
- Parry Sugars Refinery, India
- IEA Clean Coal Centre - UK
- Standard Chartered Bank - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Africa Commodities Group - South Africa
- Marubeni Corporation - India
- Eastern Coal Council - USA
- Makarim & Taira - Indonesia
- Riau Bara Harum - Indonesia
- Meralco Power Generation, Philippines
- SMG Consultants - Indonesia
- Samtan Co., Ltd - South Korea
- Barasentosa Lestari - Indonesia
- Videocon Industries ltd - India
- Indonesian Coal Mining Association
- Bulk Trading Sa - Switzerland
- Straits Asia Resources Limited - Singapore
- MS Steel International - UAE
- Siam City Cement - Thailand
- Gujarat Sidhee Cement - India
- Bhushan Steel Limited - India
- Dalmia Cement Bharat India
- Wood Mackenzie - Singapore
- Coal and Oil Company - UAE
- SMC Global Power, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Kartika Selabumi Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Larsen & Toubro Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Vedanta Resources Plc - India
- Baramulti Group, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Bhatia International Limited - India
- CNBM International Corporation - China
- Electricity Generating Authority of Thailand
- Independent Power Producers Association of India
- Bukit Makmur.PT - Indonesia
- CIMB Investment Bank - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Sojitz Corporation - Japan
- South Luzon Thermal Energy Corporation
- Kapuas Tunggal Persada - Indonesia
- PowerSource Philippines DevCo
- Commonwealth Bank - Australia
- Planning Commission, India
- Sree Jayajothi Cements Limited - India
- Chettinad Cement Corporation Ltd - India
- Essar Steel Hazira Ltd - India
- Siam City Cement PLC, Thailand
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- Bharathi Cement Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- Anglo American - United Kingdom
- Toyota Tsusho Corporation, Japan
- Kideco Jaya Agung - Indonesia
- Madhucon Powers Ltd - India
- Bangladesh Power Developement Board
- Rashtriya Ispat Nigam Limited - India
- Energy Development Corp, Philippines
- Bhoruka Overseas - Indonesia
- Energy Link Ltd, New Zealand
- Binh Thuan Hamico - Vietnam
- Uttam Galva Steels Limited - India
- Indian Energy Exchange, India
- Iligan Light & Power Inc, Philippines
- Tata Chemicals Ltd - India
- Ministry of Transport, Egypt
- Gujarat Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Ministry of Finance - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Posco Energy - South Korea
- Indogreen Group - Indonesia
- GMR Energy Limited - India
- ICICI Bank Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- The Treasury - Australian Government
- GAC Shipping (India) Pvt Ltd
- Interocean Group of Companies - India
- Simpson Spence & Young - Indonesia
- Grasim Industreis Ltd - India
- Bayan Resources Tbk. - Indonesia
- The University of Queensland
- GVK Power & Infra Limited - India
- Aditya Birla Group - India
- Kaltim Prima Coal - Indonesia
- Renaissance Capital - South Africa
- Jindal Steel & Power Ltd - India
- Wilmar Investment Holdings
- Deloitte Consulting - India
- Xindia Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Alfred C Toepfer International GmbH - Germany
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Energy - Thailand
- Coalindo Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sakthi Sugars Limited - India
- Global Coal Blending Company Limited - Australia
- SN Aboitiz Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Mercator Lines Limited - India
- Global Green Power PLC Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- The State Trading Corporation of India Ltd
- OPG Power Generation Pvt Ltd - India
- Parliament of New Zealand
- Aboitiz Power Corporation - Philippines
- India Bulls Power Limited - India
- Minerals Council of Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Altura Mining Limited, Indonesia
- Bukit Baiduri Energy - Indonesia
- Edison Trading Spa - Italy
- Price Waterhouse Coopers - Russia
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- European Bulk Services B.V. - Netherlands
- San Jose City I Power Corp, Philippines
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- Semirara Mining Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Attock Cement Pakistan Limited
- Intertek Mineral Services - Indonesia
- Merrill Lynch Commodities Europe
- Romanian Commodities Exchange
- Australian Commodity Traders Exchange
- Borneo Indobara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Medco Energi Mining Internasional
- Cement Manufacturers Association - India
- Leighton Contractors Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Banpu Public Company Limited - Thailand
- Antam Resourcindo - Indonesia
- Manunggal Multi Energi - Indonesia
- Indian Oil Corporation Limited
- Karbindo Abesyapradhi - Indoneisa
- Sical Logistics Limited - India
- Mintek Dendrill Indonesia
- Salva Resources Pvt Ltd - India
- Central Electricity Authority - India
- Meenaskhi Energy Private Limited - India
- Vizag Seaport Private Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Australian Coal Association
- London Commodity Brokers - England
- Malabar Cements Ltd - India
- Port Waratah Coal Services - Australia
- Georgia Ports Authority, United States
- Electricity Authority, New Zealand
- PNOC Exploration Corporation - Philippines
- Trasteel International SA, Italy
- Timah Investasi Mineral - Indoneisa
- Kobexindo Tractors - Indoneisa
- Formosa Plastics Group - Taiwan
- Semirara Mining and Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Mines - Canada
- Power Finance Corporation Ltd., India
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- Carbofer General Trading SA - India
- Singapore Mercantile Exchange
- Goldman Sachs - Singapore
- Orica Mining Services - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Thai Mozambique Logistica
- Central Java Power - Indonesia
- Latin American Coal - Colombia
- Mercuria Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Karaikal Port Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Maheswari Brothers Coal Limited - India
- Globalindo Alam Lestari - Indonesia
- Mjunction Services Limited - India
- Sindya Power Generating Company Private Ltd
- Directorate General of MIneral and Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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