Downstream policy through development of refinery industry is considered to provide a multiplier effect, such as revenue, due to the increase of added value and employment opportunity. In addition, this policy is also believed to hamper illegal mining which harm the environment. These findings are delivered by Uka Wikarya, Senior Researcher of Lembaga Penyelidikan Ekonomi dan Masyarakat Fakultas Ekonomi dan Bisnis, Universitas Indonesia (LPEM-FIB UI).
Uka delivered his research entitled “Ore Export Ban, Illegal Bauxite Mining, Industry and Economy Development and Environment Impact in West Kalimantan” in series of PWYP Knowledge Forum last January. His research findings show that prior to smelter development, 10 mining workers can provide employment opportunity for 14 people in West Kalimantan, while after smelter development, 10 mining workers can provide employment opportunity for 19 people in West Kalimantan. “Smelter development also contribute to greater economic impact for local economy, including people living near mining area,” affirmed Uka.
He added, processing and refining of mineral in the domestic will give added value in the mining sector. He made a simulation, if 1-tonne bauxite worth US$ 40,00 is processed, it will result 650 kilogram alumina worth US$ 208. Meanwhile, if those alumina is processed, it will result 325 kilogram of aluminium, worth US$ 546.32. “The economic value is increased by 13.6 times,” added him.
In West Kalimantan today, there are 5 holders of IUP OP (production mining permit) which have built smelter with processing capacity more than 7 million tonne of bauxite per year. It can be processed into 3.5 million tonne aluminium. Given only 1 million tonne of aluminium for domestic needs, Indonesia can gain huge benefit from aluminium export. “Government shall commit to develop downstream industry. Thus ore export ban policy will give maximum economic impact,” affirmed Uka.
On the other hand, ore export ban policy is also closely related with illegal mining activity. According to Uka, when the export ban was implemented in 2014, it’s highly susceptible that bauxite was smuggled to Malaysia. It’s indicated from the figure of Indonesia’s export which decreased significantly from 57 million tonne to 2 million tonne. Meanwhile, Malaysia’s export increased substantially from 13 thousand tonne to 3 million tonne in 2013. This was strengthen by the fact there is not significant decline of mining employment in 2014, whereas it should be drastically declined because of the export ban that year.
Uka also underlined that export ban policy need to be reinforced considering its potential to decrease the rate of environmental degradation. “Mining activities affected the function of environment the most. This can be seen from higher water and soil contamination of West Kalimantan compare to the national rate. Therefore, export ban policy in some way can prevent greater environmental damage,” affirmed him. (ASR)