Indonesian govt to allow provisional bauxite exports under revised rule

The Indonesian government has come up with a revised version of a regulation on coal and mineral resources activities in the country, which is likely to mark a change in the licensing regime bringing flexibility in mineral exports. Energy and Mineral Resources Ministry secretary-general Teguh Pamudji affirmed the revision was aimed at encouraging domestic mining companies to change the contract of work (CoW) into a special mining license (IUPK), in response to which the government will grant the nickel ore and bauxite miners the permit to export their mineral resources for five years.

"Article 169 in the 2014 Mining Law says that in one year, the CoW must be changed to the IUPK," Teguh said in Jakarta on Tuesday.

However, his statement highlighted several issues related to policies including the percentage of revenue that the state would be getting once the change is implemented and the decreasing acreage of mining areas.



As per the revised regulation, the government will issue five-year export permits to only those nickel ore and bauxite imports who are currently building their own refineries. Under the existing policy, nickel ore and bauxite export permits are issued for only six months with another six-month (possible) extension.

Nickel ore and bauxite are the two commodities that are banned from being exported currently because of an ongoing downstream industry development programme.

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In the backdrop of the regulation change Budi Santoso, a director at energy think tank the Centre for Indonesian Resources Strategic Studies (Cirrus), warned the government not to misuse the regulation by unfairly favouring certain miners for the sake of the country's mineral resources industry which is crucial for the entire economy.