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Sudirman to retain export ban despite legal challenge 29-Oct-2014

Newly appointed Energy and Mineral Resources Minister Sudirman Said has said he will maintain the ban on unprocessed mineral exports, despite the legal challenge from several mining companies.

 
He said the export ban on raw minerals was necessary to support the government’s commitment to strengthen the downstream mining industry to enable the country to gain more added value from its rich mineral resources.
 
Sudirman said the development of the downstream industry would not be an easy task, as it would require strong commitment by the government and business players.
 
“What we need is to work on difficult but important matters, such as [establishing] the downstream sector. We often opted for easy gains but that made us dependent on foreigners. This nation is big but we frequently underestimate ourselves,” Sudirman said during his first meeting with the press on Monday.
 
Sudirman was president director of state-owned weapons producer PT Pindad before being installed in his current job. But he is no stranger to the energy business, having held strategic positions at state oil firm PT Pertamina under the leadership of Ari Soemarno between 2006 and 2009. Ari is the brother of State Enterprises Minister Rini Soemarno
 
Sudirman admitted, however, that he still needed to consult his subordinates in the ministry regarding the ore export ban and other issues. 
 
On Jan. 12, Indonesia introduced the ban on mineral ore exports, requiring mining companies to process and refine their ore in domestic smelters. The policy is aimed at encouraging downstream business and to help the country reach a higher position in the global production chain. Indonesia has long been known as a major exporter of various minerals, such as bauxite and nickel ore, which prior to the policy were mostly processed and refined overseas.
 
A number of companies have filed for a judicial review of the export ban at the Constitutional Court on the ground that the policy contravenes the 2009 Mining Law. The court is expected to issue its ruling soon.
 
Sudirman also said that he wanted to restore public trust in the Energy and Mineral Resources Ministry, which has been under the spotlight due to several corruption cases.
 
“A number of cases have damaged the public’s trust in the ministry. I’m asking my team to work hard to regain public trust. We will do this by serving the people. The people are the primary target for all our programs,” Sudirman said.
 
Last September, former energy minister Jero Wacik was named a suspect by the Corruption Eradication Commission (KPK) for alleged extortion. Prior to Jero’s case, the KPK also arrested former Upstream Oil and Gas Regulatory Special Task Force (SKKMigas) chief Rudi Rubiandini, who was caught red-handed accepting a bribe. 
 
The cases caused uncertainty in the energy and mining sectors and stalled the approval of several large-scale projects.
 
Addressing the prolonged permit process would also be a priority to attract investment in the oil and gas sector, which had been tainted by the corruption cases, Sudirman said.
 
President Joko “Jokowi” Widodo said earlier that Sudirman was named the new energy and mineral resources minister due to his commitment in fighting corruption. Sudirman is the cofounder of the Indonesian Transparency Society (MTI).
 
Apart from protracted permit issuance, reforming the bureaucracy and amending regulations that hampered attempts to increase the country’s oil and gas production also needed to be addressed by the new minister, according to Indonesian Petroleum Association (IPA) president Lukman Mahfoedz.
 
Lukman added that one of the ministry’s priorities should be to provide legal certainty in the oil and gas sector. His comments were in reference to a bioremediation case, in which employees from Chevron Pacific Indonesia — the country’s largest oil producer — were detained for alleged corruption. Chevron argued that the bioremediation project was performed in accordance with prevailing regulations.
 
“This was a very serious case and an instance of criminalization that still haunts the oil and gas sector,” Lukman said.

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