Jakarta (The Jakarta Post/ANN) - A preliminary report on Indonesia's mineral exports for the month of June shows at least three commodities were severely affected by a set of new regulations that stipulate, among other things, a 20 per cent export tax and the so-called "clean-and-clear" mechanism.
Based on Trade Ministry data, the export of nickel plunged 80 per cent from 2.8 million tonnes in May to 572,106 tonnes in June.
The export of copper nose-dived 90 per cent from 193,941 tonnes in May to 20,000 tonnes June. Bauxite suffered the most with almost no exports in June from 2.36 million tonnes just a month before.
Shelby Ihasan Saleh of the Indonesian Nickel Association blamed the tightening of export regulations for flagging nickel exports.
The Energy and Mineral Resources Ministry, in tandem with the Trade Ministry and the Finance Ministry, issued a set of new regulations on May 6 that demanded tougher requirements pertaining to the export of 65 types of raw minerals and imposed a 20 per cent export tax, with an exemption for coal.
The requirements include obligations for mining companies operating under mining permits (IUP) to obtain "clean-and-clear" status for their activities, to pay all tax an non-tax financial obligations and to submit a comprehensive proposal on their business plans for the creation of added-value to their mining products.
A clean-and-clear status indicates that the activities are in line with the government's environmental policies and that all legal requirements, including those on land usage, have been met.
The creation of added-value is required by the 2009 Mining and Coal Law, which stipulates that within five years of the law taking effect, Indonesia will no longer permit the export of raw minerals and will curb the exploitation of non-renewable natural resources. The provision also applies to coal.
"Currently there are only six shipments of nickel, a drop from the average 15 to 20 shipments per month. Among the six shipments, two are from PT Antam, which gets nickel mostly from Sulawesi," he said.
He predicted that yearly nickel exports would not reach last year's level of 37 million tonnes. Total exports of nickel from January to June reached 19.45 million tonnes, according to Trade Ministry's data.
Japan, Indonesia's biggest nickel buyer, has raised concerns over the tighter export rule, saying that it would file a formal complaint to the World Trade Organisation and may retaliate by banning paper imports from Indonesia.
"The clean-and-clear factor exacerbates the impact of the 20 per cent export tax," said Syahrir Abubakar, the executive director of the Indonesian Mining Association.
Based on IMA data, only 4,151 mining companies had been awarded clear-and-clean status out of a total of 10,235 companies registered in the association.
Abubakar also pointed out that the new export regulations came when the mining industry was entering a period of lower global commodity prices due to weakening demand led by the economic crisis in Europe and US.
According to the ministry's data, the coal exports fell 13 per cent from 30.16 million tonnes in May to 26.2 million tonnes in June.
Indonesian Coal Mining Association chairman Bob Kamandanu said roughly 150 million tonnes of coal were exported in the first six months of the year.
"As much as 30 million tonnes was allocated for the domestic market and the rest went overseas," Kamandanu said.