JAKARTA: The government’s disincentive policy in form of higher export duty on non-renewable natural resources can draw investment in downstream industry valuing at least US$10.8 billion.
“The stipulation on export duty is implemented in accordance to the Law on Mineral and Coal Mining, in which the export of mineral raw materials will be stopped starting from 2014 and such export duty is considered as a transition period before the export ban is fully enforced,” said Ministry of Industry M.S Hidayat in Jakarta on Monday (8/6/2012), as cited by Antara.
The application of export duty will largely hamper mineral exports, reducing available reserves in a short time. Non-renewable natural resources that will be subjected to export duty are bauxite, copper, nickel, iron ore and iron sand.
“The proven bauxite reserves are approximately 108 million metric tons. Currently, the entire production as many as 15 million tons per annum is exported. If this condition continues to occur then the reserve will run out in the next seven years. Thus, domestic alumina industry would not be able to enjoy growth,” he said.
The government expects the export duty policy on bauxite will boost growth in domestic industrial processing of bauxite into alumina with capacity of 7 million tons per annum. It needs US$8.4 billion for investment.
“The needs of alumina for PT Inalum around 500,000 tons per annum can be fulfilled from domestic industry. All produced iron ore and iron sand is also exported. If allowed, iron ore reserves will run out within nine years, while iron sand in the next three years,” he said.
The export duty is also aimed to boost growth in sponge/pig iron industry with capacity of 5 million tons per annum through US$1 billion investments. Likewise, copper industry is also expected to grow, although it has very large reserves but most of the concentrate production is exported. (T06/msw)
Showing 0 - 0 of 0 comments