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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, 28 June 24
INDIAN POWER STATIONS STOCKED WITH BUMPER COAL SUPPLY AS TRANSPORT WOES EASE - BUSINESS STANDARD
Even as power demand has touched a historic high of 250 gigawatts (Gw) amid sweltering heat this June, India’s power stations are stocked wit ...
Friday, 28 June 24
INDIA'S CY23 COAL USE LARGER THAN NORTH AMERICA, EUROPE COMBINED - THE HINDU
For the first time, India’s coal consumption surpassed that of North America and Europe combined in the calendar year 2023, said Energy Insti ...
Monday, 24 June 24
PLN'S FINANCIAL SUSTAINABILITY RESTS ON ACCELERATED COAL RETIREMENT AND RENEWABLES DEPLOYMENT - MUTYA YUSTIKA
On 28 May 2024, Indonesia’s national electricity utility, PT Perusahaan Listrik Negara (PLN), released its financial report for 2023. Althoug ...
Monday, 24 June 24
INDIA'S COAL-BASED POWER DEMAND AT ALL-TIME HIGH, GOVERNMENT SAYS - REUTERS
India’s demand for coal-based power has risen by 7.3% this fiscal year to an all-time high, the government said in a statement on Wednesday.
...
Monday, 24 June 24
CHINA'S COAL INDUSTRY TURNS GREENER THROUGH INNOVATIVE APPROACHES - PEOPLE'S DAILY
At an opencast mine operated by Inner Mongolia Pingzhuang Coal Group Co. Ltd., a subsidiary of CHN Energy Investment Group (CHN Energy), a 14-meter ...
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Showing 11 to 15 news of total 6871 |
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- Energy Link Ltd, New Zealand
- India Bulls Power Limited - India
- Parry Sugars Refinery, India
- Bukit Asam (Persero) Tbk - Indonesia
- Romanian Commodities Exchange
- SN Aboitiz Power Inc, Philippines
- Renaissance Capital - South Africa
- Essar Steel Hazira Ltd - India
- Chettinad Cement Corporation Ltd - India
- LBH Netherlands Bv - Netherlands
- International Coal Ventures Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Latin American Coal - Colombia
- Directorate Of Revenue Intelligence - India
- Standard Chartered Bank - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TeaM Sual Corporation - Philippines
- Africa Commodities Group - South Africa
- Dalmia Cement Bharat India
- Kohat Cement Company Ltd. - Pakistan
- OPG Power Generation Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Salva Resources Pvt Ltd - India
- The University of Queensland
- Eastern Coal Council - USA
- GAC Shipping (India) Pvt Ltd
- Gujarat Electricity Regulatory Commission - India
- VISA Power Limited - India
- Indika Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- SMC Global Power, Philippines
- Merrill Lynch Commodities Europe
- Bank of Tokyo Mitsubishi UFJ Ltd
- San Jose City I Power Corp, Philippines
- Malabar Cements Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Posco Energy - South Korea
- Port Waratah Coal Services - Australia
- GMR Energy Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Wilmar Investment Holdings
- Bulk Trading Sa - Switzerland
- Trasteel International SA, Italy
- The State Trading Corporation of India Ltd
- Ambuja Cements Ltd - India
- Planning Commission, India
- Bukit Baiduri Energy - Indonesia
- Kumho Petrochemical, South Korea
- Pendopo Energi Batubara - Indonesia
- Kobexindo Tractors - Indoneisa
- White Energy Company Limited
- Aditya Birla Group - India
- Singapore Mercantile Exchange
- Metalloyd Limited - United Kingdom
- Mercuria Energy - Indonesia
- Sical Logistics Limited - India
- Bhoruka Overseas - Indonesia
- Marubeni Corporation - India
- Global Coal Blending Company Limited - Australia
- Central Electricity Authority - India
- Deloitte Consulting - India
- McConnell Dowell - Australia
- Thai Mozambique Logistica
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining Corp, Philippines
- Goldman Sachs - Singapore
- Attock Cement Pakistan Limited
- Ministry of Transport, Egypt
- Intertek Mineral Services - Indonesia
- Meralco Power Generation, Philippines
- Sindya Power Generating Company Private Ltd
- Coastal Gujarat Power Limited - India
- Electricity Generating Authority of Thailand
- Antam Resourcindo - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Mintek Dendrill Indonesia
- Carbofer General Trading SA - India
- Chamber of Mines of South Africa
- New Zealand Coal & Carbon
- Aboitiz Power Corporation - Philippines
- Jaiprakash Power Ventures ltd
- London Commodity Brokers - England
- Maheswari Brothers Coal Limited - India
- Kartika Selabumi Mining - Indonesia
- Cement Manufacturers Association - India
- Wood Mackenzie - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Orica Mining Services - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Sakthi Sugars Limited - India
- Bayan Resources Tbk. - Indonesia
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- CIMB Investment Bank - Malaysia
- Mercator Lines Limited - India
- ASAPP Information Group - India
- Electricity Authority, New Zealand
- Krishnapatnam Port Company Ltd. - India
- MS Steel International - UAE
- Interocean Group of Companies - India
- Savvy Resources Ltd - HongKong
- Sinarmas Energy and Mining - Indonesia
- Anglo American - United Kingdom
- Makarim & Taira - Indonesia
- Rio Tinto Coal - Australia
- Bukit Makmur.PT - Indonesia
- Siam City Cement PLC, Thailand
- Globalindo Alam Lestari - Indonesia
- Bhushan Steel Limited - India
- Central Java Power - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Gujarat Sidhee Cement - India
- Directorate General of MIneral and Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Indonesian Coal Mining Association
- Madhucon Powers Ltd - India
- Tamil Nadu electricity Board
- Kideco Jaya Agung - Indonesia
- ICICI Bank Limited - India
- Karaikal Port Pvt Ltd - India
- Commonwealth Bank - Australia
- Borneo Indobara - Indonesia
- Independent Power Producers Association of India
- Oldendorff Carriers - Singapore
- IHS Mccloskey Coal Group - USA
- Australian Coal Association
- Indian Oil Corporation Limited
- Asmin Koalindo Tuhup - Indonesia
- Minerals Council of Australia
- Star Paper Mills Limited - India
- South Luzon Thermal Energy Corporation
- Georgia Ports Authority, United States
- Karbindo Abesyapradhi - Indoneisa
- IEA Clean Coal Centre - UK
- Sojitz Corporation - Japan
- Indogreen Group - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Videocon Industries ltd - India
- Rashtriya Ispat Nigam Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Kepco SPC Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Medco Energi Mining Internasional
- Edison Trading Spa - Italy
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- Straits Asia Resources Limited - Singapore
- Vedanta Resources Plc - India
- PTC India Limited - India
- Bhatia International Limited - India
- Holcim Trading Pte Ltd - Singapore
- Parliament of New Zealand
- Coalindo Energy - Indonesia
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Binh Thuan Hamico - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Heidelberg Cement - Germany
- Bahari Cakrawala Sebuku - Indonesia
- Agrawal Coal Company - India
- Banpu Public Company Limited - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Ministry of Mines - Canada
- Power Finance Corporation Ltd., India
- Indian Energy Exchange, India
- Simpson Spence & Young - Indonesia
- Energy Development Corp, Philippines
- Xindia Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- PowerSource Philippines DevCo
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Energy - Thailand
- Vizag Seaport Private Limited - India
- Thiess Contractors Indonesia
- Petron Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Lanco Infratech Ltd - India
- CNBM International Corporation - China
- Altura Mining Limited, Indonesia
- Global Green Power PLC Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Grasim Industreis Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Orica Australia Pty. Ltd.
- GVK Power & Infra Limited - India
- Siam City Cement - Thailand
- Riau Bara Harum - Indonesia
- Economic Council, Georgia
- Cigading International Bulk Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- Larsen & Toubro Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The Treasury - Australian Government
- Formosa Plastics Group - Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Australian Commodity Traders Exchange
- Manunggal Multi Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Tata Chemicals Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Finance - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Coal and Oil Company - UAE
- Mjunction Services Limited - India
- AsiaOL BioFuels Corp., Philippines
- Bangladesh Power Developement Board
- SMG Consultants - Indonesia
- Jindal Steel & Power Ltd - India
- Iligan Light & Power Inc, Philippines
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