New Indonesian Laws Cause Total Halt To Mine Exports

January 24th, 2014 by


Mining companies in Indonesia have halted all exports in reaction to recent laws passed by that nation’s parliament. These laws demand that all raw ores be refined in Indonesia, and levies a 20% export tax on refined metals and metal concentrates.

The hitch in the new laws is that only a couple of companies have their own smelter, and there are no independent smelting companies. This has paralyzed the $10 billion Indonesian mineral export business. Over 100 mining companies have either reduced production, or shut down entirely, sending thousands of laid-off workers into the streets of Jakarta to protest.

Indonesia is the world’s largest exporter of nickel ore, refined tin, and thermal coal (used in power generating plants.) It is the #8 gold producer in the world, at 95 tonnes. It is also a major iron ore producer to China. Spokesmen for major mining companies Freeport and Newmont said that exports would not resume while a 20% export tax was being levied on non-refined metals exports. This export tax will increase annually until it reaches 60% in three years (that is not a typo.) The Indonesian government has taken this hard stance in an attempt to get more money for its exports, instead of being simply a producer of raw commodities.

The suspension of exports by mining companies puts nearly 4% of global gold production at risk, as well as major portions of global copper, nickel, tin, and bauxite production. Analysts expect major repercussions in the nickel market.