JAKARTA-Civil society coalition of Publish What You Pay Indonesia urges President Joko Widodo and Minister of Energy and Mineral Resources (MEMR) Ignasius Jonan, to cancel the policy of mineral export relaxation, for both ore and partially processed mineral (concentrate). President Jokowi should call of Government Regulation no 1/2017 concerning the forth change of Government Regulation no 23/2010 concerning the Implementation of Mineral and Coal Business Activity. Also to instruct the Minister of EMR to revoke Minister of EMR Regulation no 5/2017 concerning Increasing Mineral Added Value through Domestic Processing and Refining Activity and Minister of EMR Regulation no 6/2017 concerning the Procedures of Issuing Recommendations for Processed and Refined Mineral Export.
Those three policies issued on last January 11, facilitate the government to issue export permit for low grade and unrefined nickel and bauxite, which are low grade nickel below 1.7% and leached bauxite. Both are categorized as raw materials. The policies also provide an opportunity for mining companies to switch their status from Contract of Work to Mining Permit or Special Mining Permit, without following the procedures as stipulated in the Mining Law no 4/2009. Additionally, the policies also ease export policy for Special Mining Permits holders, as they are allowed to export concentrate for the next five years.
National Coordinator of PWYP Indonesia, Maryati Abdullah said, “Government has issued policy that’s clearly contrary to the mandate of Mining Law, article 102 and article 103, which is requiring the companies to process and refine raw materials in the domestic. It’s also conflicted with article 170 that obliges Contract of Work holders who have been in the production phase to refine mineral ore no later than 5 years after the enactment of the law in 2009.”
Maryati affirmed that the government also didn’t comply with the Constitutional Court Decision no 10/PUU-XII/2014 that strengthens the obligation for processing and refining in the domestic and confirmed that the spirit of Mining Law in line with the Article 33 of National Constitution 1945. Because this obligation will eventually contribute to people welfare.
Aryanto Nugroho, Advocacy Manager of PWYP Indonesia added, “By easing the export for another five years, the government generously provides 13 years for mining companies to develop downstream industries after the enactment of Mining Law. This easing policies have complemented the government’s inconsistency regarding the downstream policy, since the issuance of Minister of EMR Regulation no 20/2013, Minister of EMR Regulation no 1/2014, and Minister of EMR Regulation no 5/2016, until the recently issued minister regulation.
The government indeed imposes certain restrictions on processing and refining commodity allowed for export and requirements for obtaining export permit, such as the obligation to develop smelters. However, these have been implemented before. In fact, since 2014 there is no significant progress of smelters development. It’s partly due to the easing export policy issued by the government. 4,019 of 6,541 mineral mining permits has been in the production phase, but only 26 smelters are ready to operate.
“We presume that the government tries to “wash their hand”, given their inability to execute the mandate of Mining Law especially related to the downstream industry development. Those easing export policy are presumably designed to benefit some Contract of Work companies and also nickel and bauxite companies that have yet to process and refine the minerals in the domestic,” said Aryanto.
Easing Mineral Export Triggers Environmental Damage
Hermawansyah, Director of Swandiri Institute, West Kalimantan, explained that easing export policy will increase the rate of natural resources exploitation, amid low environmental carrying capacity and vulnerability of social conflict in mining area.
Report from Institute for Economic and Social Research University of Indonesia (LPEM UI) year 2016 stated that export ban policy for raw mineral has decreased illegal mining activities. Therefore, opening the tap for raw mineral export will eventually trigger illegal mining activities. Illegal mining here include those who mine without license, mine outside their authorized area, as well as mine by ignoring good mining practices.
“In line with the LPEM UI report, Swandiri Institute and the Eyes of the Forest of West Kalimantan Network, found that 95% of Clean and Clear mining permits are overlapped with forest area, and they didn’t possess Borrow to Use Permits (IPPKH). We can’t imagine what more damage that will destroy our land,” said Hermawansyah.
Hermawansyah added that mineral export ban policy also can be translated into an effort to control mining permit issuance as placed as top priority of the work of KPK, MEMR, and other institutions in order to improve mining permit governance. By 20 December 2016, there are around 3.386 non clean and clear mining permits, which around 2000 of them are mineral permits.
Researcher of PWYP Indonesia, Rizky Ananda underlined that by easing export policy, Jokowi-JK’s government has broke its promise to increase added value in the mining sector as mentioned in the Nawa Cita. “Government should focus to formulate a holistic strategy, from upstream to downstream, to guarantee the implementation of policy in the mining sector, ensure the progress of smelters development also coordinate with related ministries to develop downstream industries,” said her.
Contact Person:
Aryanto Nugroho (aryanto@pwyp-indonesia.org)
Agung Budiono (agungbudiono@pwyp-indonesia.org)