Indonesia Is Changing Regulations for Its Mining Industry

mining site
Image Source: Beyond Coal & Gas Image Library, CC BY 2.0

Indonesia is revising its mining rules in order to loosen up a controversial ban on exports of bauxite and nickel ore and to extend exportation of mineral concentrates.

The new regulations will allow mining companies in the country to export as long as they comply with an agreement to build smelters in a five-year period. While analysts and investors expect the country to continue allowing exports of mineral concentrates, the government has surprised markets by limiting the amounts of bauxite and nickel ore to be traded.

According to Ignasius Jonan, the country’s energy and mineral resources minister, the change aims to create jobs and improve the economy, as the previous restrictions had negatively affected mining exports and revenues. He said:

“The new rules improve what we have done this far and aim to perfect them for the future.”

For miners, the change will require them to reserve at least 30% of their smelter capacity, and any excess products would be open for export. It will also require foreign miners to switch from long-term contracts of work to a mining licensing system that stipulates more limited rights. By doing so, they will be allowed to export.

The revised regulations will also enable miners in Indonesia to sell nickel ore in the international markets, instead of only in the domestic market. This means that big players, such as the American company Freeport McMoRan, will be able to continue exporting minerals, like copper concentrates.