Jakarta, Portonews.com – The Civil Society Coalition Publish What You Pay (PWYP) Indonesia urged President Jokowi and Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif to consistently not carry out a policy of easing (relaxation) exports of ore materials and mineral concentrates. Reporting to Kontan Daily (14/2/2023), the Government will again relax the ban on raw mineral exports due to the possibility of delayed smelter projects. Kontan’s investigation said most mineral entrepreneurs were also okay with imposing additional duties rather than stopping exports 100 percent.

Aryanto Nugroho, National Coordinator of PWYP Indonesia, said that if the relaxation of the raw mineral export ban is carried out again, this is a step backward in efforts to encourage increased added value within the framework of accelerating energy transition and sustainable development.

“This also contradicts President Jokowi’s statement in a press statement at the Merdeka Palace, Jakarta, Wednesday, December 21, 2022, which stated that starting June 2023, the government will impose a ban on bauxite ore exports and encourage the domestic bauxite processing and refining industry,” Aryanto explained to Portonews, Thursday (23/2/2023).

PWYP Indonesia emphasized that this export relaxation policy plan contradicts the Mineral and Coal Law mandate. As is known, Article 103 of Law (UU) Number 3 of 2020 concerning Amendments to Law Number 4 of 2009 concerning Mineral and Coal Mining (Minerba) requires holders of Mining Business Licenses (IUP) or Special Mining Business Licenses (IUPK) at the stage of mineral production operation activities to process and refine minerals from mining in the country.

It will also conflict with Article 170A of the Minerba Law, where the Holders of Contracts of Work (KK), IUP, or IUPK of metal minerals that have carried out Processing and Refining activities; in the process of building Processing and Refining facilities; and/or have carried out Processing and/or Refining cooperation with holders of Production Operation IUPs, other Production Operation IUPKs, or Production Operation IUPs specifically for Processing and Refining or other parties carrying out Processing and Refining activities, can sell certain unrefined metal mineral products in specific quantities abroad within a maximum period of 3 (three) years from the enactment of the Minerba Law or in June 2023. “The policy plan also clearly contradicts the Constitutional Court Decision (MK) Number 10 / PUU-XII / 2014, which strengthens the obligation of domestic processing and refining and states that the spirit of the Minerba Law is in line with Article 33 of the 1945 Constitution (UUD) because this obligation directly or indirectly provides maximum benefits for the prosperity of the people,” said Aryanto, The plan to relax the ban on raw mineral exports is carried out again, will add to the list of Government inconsistencies that should accelerate the realization of mineral downstream, starting from the issuance of Minister of Energy and Mineral Resources Regulation Number 20 of 2013, Government Regulation (PP) Number 1 of 2014, Permen ESDM Number 5 of 2016, PP Number 1 of 2017, Permen ESDM Number 25 of 2018 to Permen ESDM Number 17 of 2020.

“A total of 14 years since Law Number 4 of 2009 was published, the time given for the Government and business actors to build a downstream industry. That to this day, downstream progress is still not on target does not mean that the solution is a policy of relaxing raw mineral exports, “said Aryanto.

PWYP Indonesia suspects that the slow development of minerals downstream is because the Government continues to relax. However, the Government imposes minimum restrictions on the results of processing and refining and requires conditions for processing export licenses, such as the obligation to build smelters. Relaxation of mineral exports has an impact on increasing the rate of exploitation of natural resources.

Relaxing raw mineral exports could disrupt efforts to revamp and organize Mining Business Licenses (IUP) in Indonesia. In addition, it will result in massive forest land clearing and the emergence of irresponsible mining practices.

A 2016 Institute for Economic and Social Research report at the University of Indonesia (LPEM UI) states that banning raw material export has reduced illegal mining practices. Thus, the opening of the natural mineral export tap can undoubtedly trigger the existence of illegal mining. In the report, what is meant by illegal mining is not limited to unlicensed activities but can take the form of licensed companies producing above the quota or mining outside the permitted area, or running lousy mining practices.

Many studies have been conducted by both the Government and academics on the economic benefits of minerals downstream. For example, the Ministry of Energy and Mineral Resources (2023) said that bauxite down streaming could increase export value by USD 1,502.9 million and absorb 7,627 workers. The Coordinating Ministry for Maritime Affairs and Investment (Kemenko Marvest) (2022) even said that mineral downstream had encouraged significant investment growth in the mineral processing industry, especially in the nickel industry, the growth of mineral-based industrial estates outside Java, and the development of the Indonesian economy both locally and nationally.

Instead of preparing a raw mineral relaxation policy, the Government should focus on encouraging policies to accelerate minerals downstream, starting from regulations, providing incentives, strengthening guidance and supervision, and ensuring environmental and human rights compliance, including risk mitigation if there are lawsuits at the international level, such as the European Union’s lawsuit at the WTO over the downstream nickel policy some time ago.

Aryanto also reminded us that the downstream mineral policy should not be acceptable with the energy transition goals to adapt and mitigate climate change impacts and achieve Sustainable Development Goals (SDGs). That minerals will be increasingly needed for energy transition needs does not mean that it justifies massive mineral exploitation. The principles of equitable energy transition must remain a guideline in its implementation.

Source: Porto News