Indonesian government unsure about their stand on the bauxite export ban

The Indonesian government is in a fix about what to do with the mineral export ban since the announcement of a possible annulment of the ban caused mixed reactions.

Said Didu, the head of smelter development acceleration team had said recently that the government is thinking of easing the bauxite export ban to generate revenue if miners were ready to commit that the earnings will be used for building smelters.

Budi Santoso however argues that the idea is irrelevant. First of all this system would provide opportunity to play favorites with big companies. The policy should be applied to all mining companies.

Another important consideration is that export of bauxite does not yield nearly enough revenue to develop smelters. While it takes between $500 million and $2 billion to build a smelter, the profits from bauxite exports range between $5 and $10, per ton. A miner exporting two million tons of bauxite annually will only get $20 million net earnings, says Budi.

Budi believes that this policy is being pushed to cure the budget deficit faced by the country after the mineral export ban. This sector contributed 60% of the country’s exports prior to the ban, the absence of which is hitting Indonesia’s economy quite hard.

Bauxite miners however are happy with the decision and say that the earnings would at least help ease the expenses of building a smelter. Syahrir Abubakar, the executive director of the Indonesia Mining Association (IMA), said on Wednesday, “This is correct, logical thinking, we have been demanding for it for so long.”.