* President eases export ban's impact on Freeport, Newmont
* Govt orders halt of $2 bln worth of nickel, bauxite
* Thousands of layoffs and small mine closures
* Mining associations plan legal action against ban
By Kanupriya Kapoor and Wilda Asmarini
JAKARTA, Jan 12 Indonesia, among the world's
biggest suppliers of natural resources, halted all mineral ore
exports on Sunday to try to promote domestic processing, but
threatening the country's nickel and bauxite industries worth
more than $2 billion in annual shipments.
Halting exports of nickel ore could spark the biggest
shake-up in the global nickel industry in more than five years,
with Chinese stainless steel factories that make everything from
kitchenware to cars and buildings set to hurt the most.
In one of his most far-reaching economic policy decisions
since taking office nearly 10 years ago, President Susilo
Bambang Yudhoyono approved the mineral ore export ban.
But in last minute changes at the weekend, he diluted it to
allow exports of copper, iron ore, lead and zinc concentrates to
continue, giving a reprieve to U.S. mining giants Freeport
McMoRan Copper & Gold and Newmont Mining Corp,
which together produce 97 percent of Indonesia's copper.
No such relief was offered to the nickel and bauxite
industries, clouding the future for state-owned nickel miner PT
Perusahaan Perseroan Aneka Tambang (Antam) and
hundreds of other smaller miners.
"Minerals that have to be refined before export are bauxite,
nickel, tin, chromium, gold and silver because they don't have
intermediate products," Sukhyar, director general of coal and
minerals at the ministry, told Reuters.
The long-planned ban hopes to eventually boost Indonesia's
profits from its mineral wealth by forcing miners to process
their ores before export. But officials fear a short-term cut in
foreign revenue could widen the current account deficit, which
has undermined investor confidence and battered the currency.
Indonesia is also the world's biggest exporter of refined
tin and thermal coal and home to the fifth largest copper mine
and top gold mine. Mineral shipments totalled $10.4 billion in
2012, around 5 percent of total exports, according to the World
Yudhoyono's last-minute regulation significantly lowers the
minimum processing requirements for copper, manganese, lead,
zinc and iron ore to be defined as concentrates. However,
officials have said that such exports would only be allowed
Under the proposed changes government officials said 66
companies, which include Freeport and Newmont, would be allowed
to continue to export "processed mineral" as they have provided
assurances to the government that they would soon build the
"As long as they can fulfill the requirements, Freeport and
tens of national miners are still allowed to export," Industry
Minister M.S. Hidayat told Reuters.
More details are expected to be announced this week.
The companies likely to feel the most impact from the ban
are miners of nickel and bauxite, numbering in the hundreds.
Shortly before the ban took effect, Freeport halted copper
exports and said it would not resume them until there was
clarity on which minerals can be shipped.
Freeport Indonesia CEO Rozik Soetjipto told Reuters he
believed the company would be allowed to continue shipping
copper concentrate, but was awaiting government confirmation.
Freeport, Indonesia's dominant copper producer with 73
percent market share, has not made a shipment from its remote
Papua port since Dec. 15, said union official Virgo Solossa.
A company spokeswoman said Freeport continued to provide
copper to a local smelter.
More than 100 mining companies have been forced to reduce or
shutdown operations because of the uncertainty.
Along with Freeport, Indonesian miner Perusahaan Perseroan
Aneka Tambang (Antam) also stopped nickel ore exports a few days
ago, the firm's corporate secretary Tri Hartono said.
The Indonesian Mineral Entrepreneurs Association said it
plans to challenge the ban in the Supreme Court and
Constitutional Court, the two highest courts in the country.
BAN COULD BECOME ELECTION ISSUE
A major economic impact could make the ban a hot political
issue in this year's legislative and presidential elections in
the world's fourth most populous country.
Thousands of mine workers have already been laid off ahead
of the ban, sparking protests in Jakarta.
"We call on all mining workers to prepare to go on the
streets and swarm the presidential palace if the government goes
ahead with the implementation of the ban," said Juan Forti
Silalahi of the National Mine Workers Union in a statement on
Police have been stationed at ports and around mines to
secure those places in case of public disturbances, said
national police spokesman, Boy Rafli Amar.