Bauxite miners cease operations as Navy intensifies patrols

Bauxite mining contractors and other stakeholders have halted operations in West Kalimantan and Riau Islands, the country’s biggest producers of the ore, as the government effectively banned mineral ore exports on Sunday.

Some contractors, however, stopped operating three months ago.

Dedy W. Kurniawan, president director of PT Jaya Agung Abadi, said on Sunday that his company, which previously provided mining transportation services in three bauxite mining sites in the province, had to stop operations.

“Our heavy equipment units that were on lease were withdrawn because our bills had inflated,” he said in Pontianak.

“With mining activities being halted, our business has stopped as well. Nobody knows how long this will last.”

He argued that the government’s ban on raw mineral exports should have been introduced with solutions for those in the business as well.

President Susilo Bambang Yudhoyono signed a government regulation banning raw mineral exports late on Saturday before it was effectively implemented on Sunday.

The regulation, which implements stipulations of the 2009 Minerals and Coal Law, also determines export duties applied progressively for the export of minerals that have been processed and/or purified, to encourage miners to build smelters or process their minerals locally.

Indonesia has 3.47 billion tons of potential bauxite resources, based on the number of mining permit (IUP) holders, according to the Energy and Mineral Resources Ministry’s latest data.

West Kalimantan and the Riau Islands keep the most of the resources.

Swandiri Institute, which conducts research on the extractive industry in West Kalimantan, recorded that there were 721 mining units on a total of 5.07 million hectares of land in 12 regencies (out of a total of 14 regencies and cities in the province) as of last year.

Production activities have been carried out in 227 mining units on 448,000 hectares of land, while the remaining units are still in the exploration stage.

Swandiri Institute coordinator Hermawansyah said most of the mining units in the province held bauxite.

Renny Rey, director of PT Dara Tilap Niga, one of the bauxite exporters to China, said his company’s trading activities had stopped effectively starting Sunday.

The company was usually able to ship 30,000 tons of bauxite from three mining sites in Ketapang.

Despite abundant bauxite resources, the country has no processing facilities that can turn the mineral into alumina — raw material that has always been imported by state-owned Indonesia Asahan Aluminium (Inalum), which is based in North Sumatra and operates the only aluminum smelter in Southeast Asia.

The Harita Group has been building a US$1 billion smelter to process bauxite into aluminum in Ketapang since July last year with the establishment of PT Well Harvest Winning Alumina Refinery, a joint venture with China Hongqiao.

Russian United Company RUSAL has conveyed its plan to the government to team up with local partners to construct refineries and smelters costing $6 billion in West Kalimantan. Late in October last year, state-owned mining firm PT Aneka Tambang (Antam), with its Japanese partner Showa Denko KK, officially commenced operations at its chemical-grade alumina (CGA) plant located in Tayan, West Kalimantan.