The government’s advisory team has proposed the removal of the bauxite export ban to help miners raise fresh funds to finance the construction of their aluminum smelters, many of which have been stalled due to financial problems.
The so-called team for the acceleration of smelter development said that a number of aluminum smelter projects had been delayed as miners did not have enough funds to continue construction.
Said Didu, the head of the team established by the Energy and Mineral Resources Ministry last month, said on Monday that his team was studying the possibility of allowing bauxite miners to ship their production overseas.
With such special treatment, a number of aluminum smelters currently under construction could continue, he said. He, however, said that if they were allowed to export, they would be required to pay export taxes and provide surety bonds to ensure that all export proceeds would be used for the construction of the smelters.
As of January last year, the government no longer allows mineral ore exports with the implementation of 2009 Mining Law, which requires mining firms to process minerals in local smelters before selling them overseas. The regulation was issued to increase the value of the country’s mineral production.
Exemptions, however, have been given to major copper producers such as PT Freeport Indonesia and PT Newmont Nusa Tenggara. The two mining giants were permitted to export semifinished mineral products known as copper concentrates after they showed serious commitment to building smelters.
The government refuses to give similar treatment to bauxite producers because their exports consist entirely of raw minerals.
A dissenting opinion regarding the proposal to remove the ban on bauxite exports came from the Energy and Mineral Resources Ministry’s director general for mineral and coal, R. Sukhyar. “The government has not stated anything on the matter. This is false and disruptive,” Sukhyar said separately on Monday.
The country produced over 58 million tons of bauxite in 2013, according to figures from the ministry’s mineral and coal directorate general. The figure dropped sharply to 2.8 million tons last year following the ban.
Currently, the only smelter that processes bauxite is operated by PT Indonesia Chemical Alumina (ICA), a subsidiary of state-owned PT Aneka Tambang. The ICA plant, which processes bauxite into alumina with an input capacity of 300,000 tons, has commenced commercial operations.
Four other smelters are in development, consisting of a smelter in West Kalimantan by PT Well Harvest and Harita Group, in West Kalimantan by PT Indo Kapuas Alumina, a facility in Riau by Bintan Alumina Indonesia and another smelter in West Kalimantan by Nusapati Alumina Refinery.
Harita director Erry Sofyan said earlier that his company’s smelter was 43 percent complete.
“We expect to start production with the input of 2 million tons early next year in our first phase of development. The second development, which will bring total capacity to 4 million tons, is aimed for completion in 2017,” Erry said.
The Jakarta Post
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