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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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Wednesday, 12 June 24
CHINA ACCOUNTS FOR 16.3% OF AUSTRALIA'S COAL EXPORTS, FOLLOWED BY INDIA 14.4% - BANCHERO COSTA
Global coal trade has really picked up pace in recent months, and is now fully back to pre-Covid levels says Banchero Costa in its latest report.
...
Wednesday, 12 June 24
LNG NEWBUILDING VALUES AT RECORD HIGH: 78 NEWBUILD ORDERS PLACED IN 2024, DOUBLING 2023 - VESON NAUTICAL
The number of LNG newbuilding orders have more than doubled from the same period last year where 34 orders were placed, compared to 78 in the first ...
Monday, 10 June 24
CHINA'S MAY COAL IMPORTS RISE 11% ON LOWER DOMESTIC OUTPUT - REUTERS
China’s imports of coal rose 11% in May from a year earlier, customs data and Reuters records showed on Friday, as lower domestic output this ...
Tuesday, 04 June 24
HOW DO WESTERN SANCTIONS ON RUSSIA IMPACT THE GLOBAL METALS, MINING AND COAL MARKETS - WOOD MACKENZIE
The geopolitical landscape for Russia, as a major supplier of various commodities, has undergone a dramatic transformation since the invasion of Uk ...
Friday, 22 March 24
CASE STUDY: DANGERS OF COAL CARGO - SKULD
Recently, a bulk cargo vessel carrying coal from South Africa to Singapore suffered a fatal accident, resulting in the deaths of three crew members ...
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Showing 21 to 25 news of total 6871 |
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- Global Business Power Corporation, Philippines
- Goldman Sachs - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Madhucon Powers Ltd - India
- Jaiprakash Power Ventures ltd
- Maharashtra Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- ICICI Bank Limited - India
- Vizag Seaport Private Limited - India
- Price Waterhouse Coopers - Russia
- Coal and Oil Company - UAE
- Manunggal Multi Energi - Indonesia
- Ambuja Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Electricity Authority, New Zealand
- London Commodity Brokers - England
- PTC India Limited - India
- Therma Luzon, Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Sojitz Corporation - Japan
- Savvy Resources Ltd - HongKong
- Bharathi Cement Corporation - India
- Kartika Selabumi Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Altura Mining Limited, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Economic Council, Georgia
- Sinarmas Energy and Mining - Indonesia
- Carbofer General Trading SA - India
- Thai Mozambique Logistica
- Rashtriya Ispat Nigam Limited - India
- International Coal Ventures Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- ASAPP Information Group - India
- Mjunction Services Limited - India
- TeaM Sual Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Holcim Trading Pte Ltd - Singapore
- SN Aboitiz Power Inc, Philippines
- Medco Energi Mining Internasional
- CIMB Investment Bank - Malaysia
- Rio Tinto Coal - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Mining Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Tata Chemicals Ltd - India
- White Energy Company Limited
- PNOC Exploration Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Edison Trading Spa - Italy
- SMG Consultants - Indonesia
- Siam City Cement - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Sidhee Cement - India
- GVK Power & Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- Posco Energy - South Korea
- Electricity Generating Authority of Thailand
- Uttam Galva Steels Limited - India
- Central Java Power - Indonesia
- The Treasury - Australian Government
- Cement Manufacturers Association - India
- Mintek Dendrill Indonesia
- Oldendorff Carriers - Singapore
- Antam Resourcindo - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Sarangani Energy Corporation, Philippines
- Anglo American - United Kingdom
- Deloitte Consulting - India
- Riau Bara Harum - Indonesia
- Aditya Birla Group - India
- Formosa Plastics Group - Taiwan
- Coalindo Energy - Indonesia
- Xindia Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- PetroVietnam Power Coal Import and Supply Company
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- VISA Power Limited - India
- Kideco Jaya Agung - Indonesia
- South Luzon Thermal Energy Corporation
- Bank of Tokyo Mitsubishi UFJ Ltd
- Larsen & Toubro Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement PLC, Thailand
- Mercuria Energy - Indonesia
- PowerSource Philippines DevCo
- Chamber of Mines of South Africa
- New Zealand Coal & Carbon
- Kaltim Prima Coal - Indonesia
- San Jose City I Power Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Wood Mackenzie - Singapore
- Alfred C Toepfer International GmbH - Germany
- Heidelberg Cement - Germany
- IEA Clean Coal Centre - UK
- Global Coal Blending Company Limited - Australia
- Sindya Power Generating Company Private Ltd
- Attock Cement Pakistan Limited
- Australian Coal Association
- Minerals Council of Australia
- Jorong Barutama Greston.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Malabar Cements Ltd - India
- Marubeni Corporation - India
- Baramulti Group, Indonesia
- Thiess Contractors Indonesia
- Orica Australia Pty. Ltd.
- Central Electricity Authority - India
- Coastal Gujarat Power Limited - India
- Jindal Steel & Power Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Meenaskhi Energy Private Limited - India
- Metalloyd Limited - United Kingdom
- Essar Steel Hazira Ltd - India
- Georgia Ports Authority, United States
- Singapore Mercantile Exchange
- Binh Thuan Hamico - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- Merrill Lynch Commodities Europe
- Eastern Energy - Thailand
- Indogreen Group - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- The State Trading Corporation of India Ltd
- Videocon Industries ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Transport, Egypt
- McConnell Dowell - Australia
- Directorate Of Revenue Intelligence - India
- Simpson Spence & Young - Indonesia
- Petron Corporation, Philippines
- Energy Development Corp, Philippines
- India Bulls Power Limited - India
- Ministry of Finance - Indonesia
- Latin American Coal - Colombia
- Timah Investasi Mineral - Indoneisa
- Sical Logistics Limited - India
- Commonwealth Bank - Australia
- LBH Netherlands Bv - Netherlands
- Energy Link Ltd, New Zealand
- Globalindo Alam Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Mines - Canada
- CNBM International Corporation - China
- Borneo Indobara - Indonesia
- Port Waratah Coal Services - Australia
- SMC Global Power, Philippines
- Miang Besar Coal Terminal - Indonesia
- The University of Queensland
- Lanco Infratech Ltd - India
- Kobexindo Tractors - Indoneisa
- Independent Power Producers Association of India
- Grasim Industreis Ltd - India
- Bhushan Steel Limited - India
- Africa Commodities Group - South Africa
- Samtan Co., Ltd - South Korea
- Mercator Lines Limited - India
- Iligan Light & Power Inc, Philippines
- Renaissance Capital - South Africa
- Tamil Nadu electricity Board
- Indonesian Coal Mining Association
- Global Green Power PLC Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Meralco Power Generation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bangladesh Power Developement Board
- Billiton Holdings Pty Ltd - Australia
- Parry Sugars Refinery, India
- Karaikal Port Pvt Ltd - India
- Parliament of New Zealand
- Sakthi Sugars Limited - India
- Bhatia International Limited - India
- Standard Chartered Bank - UAE
- Indian Oil Corporation Limited
- GMR Energy Limited - India
- Kumho Petrochemical, South Korea
- Indika Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Bhoruka Overseas - Indonesia
- Wilmar Investment Holdings
- Dalmia Cement Bharat India
- Vedanta Resources Plc - India
- Bulk Trading Sa - Switzerland
- Agrawal Coal Company - India
- Directorate General of MIneral and Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Star Paper Mills Limited - India
- Romanian Commodities Exchange
- Eastern Coal Council - USA
- Australian Commodity Traders Exchange
- Bukit Makmur.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Chettinad Cement Corporation Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining Corp, Philippines
- Power Finance Corporation Ltd., India
- Ind-Barath Power Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Interocean Group of Companies - India
- Kepco SPC Power Corporation, Philippines
- MS Steel International - UAE
- Cigading International Bulk Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Planning Commission, India
- IHS Mccloskey Coal Group - USA
- Trasteel International SA, Italy
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