Ex­port pol­icy U-turn sparks tur­moil

New Straits Times - - Business -

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.

BLOOMBERG PIC

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.

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