Export policy U-turn sparks turmoil
JAKARTA: A controversial U-turn on mineral exports has sparked turmoil in Indonesia’s key mining sector, providing a fresh headache for firms struggling to work in the country.
Despite sitting atop some of the world’s most abundant natural resources, successive governments have failed to take advantage of its vast riches, with critics blaming badly thoughtout policies that make the country an uncertain place to invest.
And the latest overhaul has sparked a standoff with one of the United States’s biggest miners and a major investor in the country.
Jakarta in January relaxed a 2014 landmark ban on shipments of raw mineral ores, originally aimed at spurring the domestic smelting industry but led to mine closures, job losses and a fall in government revenues.
While some firms may stand to benefit from the sudden rollback, it has infuriated firms that invested large amounts in Indonesia on operations for smelting, the process of extracting metals from their ores.
In addition, the government asked firms to sign new permits that critics say offer less protection — triggering a standoff with US giant Freeport-McMoRan, which has stopped shipments from its huge copper and gold mine in the east.
The move is the latest in a series of regulatory changes from the government that have caused jitters among miners, with some foreign firms choosing to exit Indonesia rather than deal with such an unpredictable environment.
An aerial view of US mining giant Freeport-McMoRan copper mine in Indonesia. Infuriated by a sudden policy rollback, the firm has stopped shipments from its mines in the country.