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To promote greater integration in the mining industry, a new
minerals bill will requires investments in the sector to include the
establishment of complete upstream-to-downstream processing plants, an
official says.
Simon Sembiring, director general for geothermal energy, minerals and
coal at the Energy and Mineral Resources Ministry, said the bill, which
is currently being deliberated in the House of Representatives, would
encourage investors to build more smelters and refineries in Indonesia.
"We hope that the legislation will help the mining industry here to
mature, and move in the direction of integrated production," Simon said.
In line with the need to develop local industry, Simon added, the law
would ban the export of mineral concentrates and instead require their
local refining and processing.
When asked whether the mooted legislation would effect the operations
of mining firms such as PT Freeport Indonesia and PT Newmont Pacific
Nusantara, which export most of their concentrate production, Simon
said the government had not yet decided whether the bill would cover
existing operators.
"I think they would need time to be able to establish complete
processing plants as construction would require at least a year.
Furthermore, it would also disrupt their sales contracts with third
parties," he said.
He expressed the hope that the proposed new legislation would boost
local production of copper in line with the establishment of more
smelters and refineries around the country. Currently, Indonesia has
only one copper smelter, which is operated by PT Gresik Smelter and
processes about one-third of the copper concentrate produced in the
country.
Ministry figures reveal that in 2006, Indonesia produced 3 discrete
metric tones of copper concentrate, representing an increase of 7
percent as compared to 2.8 dmt in 2005.
"We are opening opportunities to foreign investors to become involved
in building integrated operations," Simon said, adding that the new
legislation, if passed, would provide investors with legal certainty
and the motivation to intensify exploration.
The bill has been before the House for more than a year.
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