Obligation Build Smelter , Between Value Added , Level Economies , and layoffs

Obligation Build Smelter , Between Value Added , Level Economies , and layoffs


 As a consequence of the enactment of Law No. 4/2009 on Mineral and Coal Mining ( Mining Law ) mining companies operating in Indonesia , both the status of foreign investment ( PMA ) or the Domestic Investment (DCI ) they are required to build a smelter ( processing mining raw materials into finished materials .

Small and large mining companies such as PT Freeport Indonesia no longer allowed to process copper ore and gold that they took from Mt Grasberg in Tembagapura , Papua processing company to outside Indonesia

Implementation of this policy as Law. 4/2009 on Mineral and Coal Mining ( Mining Law ) are accompanied by a ban on the export of ore minerals ( ore ) on January 12, 2014 will be a challenge for the employment sector .

Imagine, estimated around 800,000 workers aka tone of the mining sector threatened termination of employment (FLE ) as a result of the application of the law . While the law has been published 5 years ago , the technical rules concerning the implementation of the new law came out in 2012, or less than a year of the law must be followed consistently and intact .
Meanwhile , to build a smelter that allows processing of mineral ore mining and refining it until stage 99.9 % as mandated by the Mining Law , mining minerals company requires 3 to 5 years . This condition is the requirement , all permits , land acquisition , supporting infrastructure such as power supplies , and funding is available .

In fact , until now no single smelter built except the already existing smelters . Capacity is limited , so it is not able to absorb all mineral production in the country .

PT Newmont Nusa Tenggara ( NNT ) and PT Freeport Indonesia ( Freeport ) example of two companies that produce copper minerals can only supply respectively 20 % and 40 % copper mineral production in the country to be processed . With the ban on exports of mineral ores , concentrates approximately 80 % copper and 60 % owned NNT Freeport copper concentrate can not be exported .

If the export ban still run , most likely done both companies are run by the company's operations rely on their respective 20 % and 40 % copper concentrate production could be absorbed domestically .

However , this condition certainly implies streamlining operations closed even with the consequence of layoff some employees and contractors .

Chairman of the Indonesian Employers Association ( Apindo ) Sofjan Wanandi said construction of the smelter is no longer visible . The reason , the price of mining products is not as nice as the 2009.

" So many employers discourage the construction of the smelter project , " said Sofyan Wanandi .
Inevitably , the businessman asked the government to review the ban on the export of minerals . Sofyan said the government and the parliament have to calculate the impact of the adoption of Law no. 4/2009 which increase the risk of unemployment .

Based on information from the association mining company obtained Apindo , there are about 800,000 pekeria threatened laid off . " But the workers who will be directly affected as many as 300,000 people , " said Sofyan .

The rest , about 500,000 miners can still do other activities or look for another job because it is not a permanent employee of the mining company .

" They are outsourcing workers employed in the mine . "

300,000 the number of permanent employees who are threatened dismissed , mining companies obviously difficult for severance pay which is considered quite high .

" Just imagine if they were an average salary of Rp20 million . How much total severance to be paid by the mining companies for skilled workers and professionals who counted them? "

Daisy Primasari , spokesman for Freeport Indonesia , has been with the firm revealed with the passage of the legislation , Freeport obviously only able to operate 40 % of the production system .

" Freeport will be very difficult to carry out if the company is optimistic that the government plans to run a ban on exports of mineral materials , including concentrates . Was not our preference , " he said recently .

Chairman of the Association of Work Unit ( PUK ) Samawa Mine Workers Union ( Spats ) PT NNT Iwan Setiawan said Newmont is certainly able to pay employee severance . However , that should worry about is the sustainability of the economy in the area .

West Sumbawa is very dependent on the presence of NNT . With the ban on exports of mineral ores , the NNT will be closed and added value to society Sumbawa immediately stopped .

"The impact is not only about the layoffs , but overall for the economy in the area . Employees on layoff , a number of families will lose revenue , community economic and social upheaval dead would arise , " he said .

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Mining Law is actually a government effort to inherit virtue of the 1945 Constitution, Article 33 Paragraph 2 and 3 , which mandates the branches of production which are important for the country and which dominate the life of people controlled by the state . Earth and water and natural resources contained therein controlled by the state and used to the maximum for the people .

Through the increase in value added in the country , processing and refining of minerals that would trigger industrialization which in turn have an impact on improving the nation 's economy and the people of Indonesia .

However , the application of rules in a hurry and do not mature will take a lot of casualties . Of course, contrary to the spirit of the glorious increase the value added in the country .
NTT President Martiono Hadianto in a press release some time ago , said it had made mineral processing and refining of copper concentrates to be a stage to 95 % .

Improving the quality of minerals that have been equivalent to the price of the final product of copper metal in the international market . Technically and economically , it is not possible to build a smelter . Therefore , it was working with other companies in terms of building a smelter .

Observers Mining MS Marpaung said mineral ore ( ore ) is a new rock removed from the mine and then do the processing and smelting to be concentrated .

On the other hand , the government assess the ore into a concentrate is not yet a part of the processing . In fact , the process of changing the excavated rock was actually the processing and refining .

" Issues such as these are polemical and confuse . Preferably government postponed a ban on exports of raw minerals that will be in place January 12, 2014 . Moreover, the ban could lead to a big impact because it deals directly with the miners , " he said .

In addition , the government assess the management of the mining business in Indonesia is very necessary to be addressed , especially mining processing system involving labor / labor .

According to the study of the Ministry of Manpower and Transmigration , many mining companies turned out to outsource its business to other companies , both domestically and abroad .

Freeport, for example , in a note Manpower , outsource at least eight types of businesses that should be the core business of the company . In addition to Freeport , there are many other mining companies who do the same .

The power transfer system , triggering an employment contract which is not bound resulting in a weak bargaining position of workers . " However , we are still studying the risk of application of the law in terms of employment , " said Sahat Sinurat , Director of Dispute Resolution of Manpower .

Through the Law No.4/2009 , as government regulators began to organize one of the many problems in the world's mining country . Although the risk of adding the unemployment rate , the government clearly being tested to run these laws consistently. Can the government find the best solution ? .

The rules ban the export of raw minerals and coal are stipulated in Law No. . 4 of 2009 will actually be held on January 12, 2013 later . Therefore , the Chairman of the Association of Indonesian Copper Gold ( ATEI ) Natsir Mansour hopes the government and the Parliament can remain consistent in applying the rule that is not easily manipulated .

According to him , the program is a form downstream minerba assessed the consistency of government that impact assessed positive for economic growth in the future . "In the future will impact both on the regional and national economic growth , especially for the growth of national industry . During this industry is still limited upstream , downstream was unwell with imported raw materials which always creates problems , " Natsir said .

With the downstream program , Natsir also hoped that the impact of social , political , and economic growth in the region could be a government concern . Because , no less than 800,000 workers directly involved in the business of minerals , as well as consider the Contract of Work ( CoW ) Mining Business License ( IUP ) and the People's Mining Permit ( IPR ) .

According to Natsir , employment in the mining sector are not directly involved as many as 3.2 million people , which is the widest in the field of hotel , transportation , bank / credit leasing cars , motorcycles , heavy equipment " Damage to infrastructure has been built employers , for four years and build re also very heavy , " he said .


Before the rule applies , some business operators and coal objected to the rule . Even business people are threatening to do the Termination of Employment (FLE ), which amounted to hundreds of thousands of workers . Responding to the snapping , Industry Minister MS Hidayat said it still would have time to study it . " On 12 January ( 2014 ) there will be going on the implementation of the Act , there were pros and cons , then the threat of layoffs and so on , the government wants to examine them one by one to where the truth , " said Hidayat

He said that the assessment of the impact of the Mining Law akah made ​​at the meeting with the vice president . But , he explained , the meeting later on will not lead to a conclusion whether to delay implementation of the downstream or not . " Not meant to approve or not , but we will examine in depth , and economic ministers were asked to examine in depth , " he said .

Furthermore , Hidayat said that the solution to be sought from the meeting of the ministers is to minimize some of the negative impacts of the implementation of the Mining Law . For example, as the threat of layoffs , the government will undertake a careful assessment Hidayat sure , the interest will not be ignored , although this time the government discussed the possibility of leniency . for the downstream firm to the rule .
" Of priority to the interests of national economic growth , " he said .

Meanwhile , Minister of Energy and Mineral Resources , Jero Wacik said that the government is not daunted by the threat of termination of employment (FLE ) mining workers by mining companies due to the application of Law ) Mining No. 4/2009 . "We are seriously discussing the Mining Law because it involves mining and value -added Indonesia including Indonesian environment and the hereafter , " Jero said .

He appealed to the businessmen of mineral and coal mining to be wise in response to this decision . He also hoped that the threat of layoffs that were previously stuck out so as not to happen . " We expect no layoffs . Layoffs later be discussed again , " he said .

Previously , PT Newmont Nusa Tenggara ( NNT )
revealed there will be layoffs if the Mining Law No. 4/2009 apply . Manager Corporate Social Responsibilfty Sharafuddin Jarot said Newmont , Newmont of approximately 4,100 employees , there is communicated to be rested and there will be changes in work schedules . " Because most of them are in the lower level , it will be proportional ( laid off ) at a lower level , " he said .

West Sumbawa Regent Zulkifli Muhadli previously said , the establishment of the Mining Law - could not be implemented at this time because there will be a multiplier effect . Because the layoffs will occur in the region of West Sumbawa since the ban on export of the Minister of Agriculture .

" Although Newmont replaced by Antam , it would be the same because none of the smelter in the region of Sumbawa , the West , " he said .

In addition to Newmont , Freeport had said it would cut about 100,000 workers Lantara not allowed to export raw materials . They will make a reasoned downstream production capacity decreases , so the number of workers to be reduced .

For the sodium absorption ratio can be other governments that their statutory asked consistently applying this law to require the construction of mineral processing and refining facilities ( smelters ) in the country , according to the Law No. 4/2009 on Mineral and Coal Mining ( Mining Law ) to all mining companies . According to Article 170 of Law 4/2009 , the contract holder shall produce work that is already mine output purify January 12, 2014 at the latest .

" It will provide great benefits for Indonesia . So , there are no other words , the government must be consistent with the laws they make, "said Executive Director Rakhmanto ReforMiner Institute Pri Agung in Jakarta .

However , Pri admit that from the beginning there are weaknesses in the provision. According to him , the provisions regarding the obligation of processing and refining in the country is technically not feasible to run the appropriate deadline , ie by 2014 . The second weakness , which he thinks is the most fundamental issue bargaining in the state to major mining companies such as PT Freeport Indonesia and PT Newmont Nusa Tenggara .

On paper , he said , it does look as if the government has a high bargaining power , authority , and power . " But in reality , like it or not , our country is quite dependent on the large corporate companies in the management and operation of the mine , " he said .

As a result , the government in practice difficult to apply sanctions against such companies . Moreover , related to Freeport and Newmont , the contract does not contain an obligation to build a smelter .

Previous Coordinating Minister Hatta Rajasa said the government will consistently perform obligations in accordance smelter Mining Law . The government will also fully support the company that will build a smelter . Mining companies from Russia , Russian Aluminium ( Rusal ) , for example , is committed to build an aluminum smelter with an investment of around $ 6 billion . However , Rusal requested government assurance to consistently implement the Mining Law .

Therefore , they are concerned their investment will be worth it because there was no mining of raw materials to be processed . In accordance with Article 170 of Law 4/2009 , contract holders are already in production work required to purify mine output in the country beginning next year . With these provisions , the contract holder of a large-scale works such as Freeport and Newmont shall purify the mining of gold, copper , and silver in the country .

Liabilities processing of raw materials to form metal mining can be done in collaboration with other companies . However , given the obligation purification only a few days away , there is a possibility feared that companies are still allowed to export its products even though only a capital commitment .

In fact , these commitments include a feasibility study or a new ground breaking construction of purification plants . .
Parliament insists will not change the requirement development and refining of mineral processing plant ( smelter ) which mandated the Law No. 4/2009 on Mineral and Coal Mining ( Mining Law ) .

Moreover, the Parliament also asked the government to firmly carry out the provisions of this smelter development obligations . "The government should be firm and should not be changed opinions in the slightest , either due to pressure or threats of entrepreneurs , " said a member of Commission VII Dito Ganindito in Jakarta . Dito asserted , Mining Law that has been made ​​by the government and the parliament must be implemented consistently.

According to him , if there is a company that does not want to comply , then the government should firmly stop the export of the company concerned .

He added that in other countries banning exports of raw mining materials following the obligation to do the processing in the country has long been applied . " So , why do not we like it . It becomes a question , " he said . Meanwhile , energy analyst from the Institute Komaidi ReforMiner Notonegoro said , the government is often problematic in enforcing the rules it has itself created .

Policies are made ​​often not thorough , not studied in-depth , and did not really run that often have negative consequences later in life .

Liabilities associated with building a smelter , the government needs to thoroughly evaluate the mining company 's refusal to implement . As is known , a number of large-scale mining companies such as PT Freeport Indonesia and PT Newmont Nusa Tenggara own mind to build a smelter . They argued that it is not economical for the company .

On the other hand , there are a number of companies from outside that expressed interest in developing a smelter in Indonesia , with no certainty of a record supply of raw materials to be processed . Therefore , the companies asked the government to consistently implement the Mining Law so that there is certainty for them . In addition to China , carrying Russian mining company , Russian Aluminium ( Rusal ) , has met Hatta Rajasa and expressed its readiness to build an aluminum smelter with a value of vitello  Estasi invnanang about $ 6 billion .

The government's plan to implement the policy on kewijiban every mining company has a smelter considered ineffective by the Secretary of the National Economic Committee ( KEN ) , Aviliani . This was conveyed after attending the Indonesian Economic Prospects 2014, " Challenges in the Middle Years of Political Economy " , in Jakarta .

"If all the factories that want to make mine should make the smelter can not . Smelter was no economies of scale , everywhere smelter built it if not there are three or four companies . So wrong , if we have to make a smelter in every company . It was not effective , " he said , as quoted Antaranews.com

In addition to the smelter matter of policy , Aviliani also said that the government should provide facilities to companies for specific products . Eg chemical products .

" The chemical products if a lot of competition so to not want dong . Because it will not achieve economies of scale . That's what we do not ever thinking . All - all it was tendered . So it should be sorted out , " he said .

In accordance with Law no . 4 In 2009 , the Minister of Energy and Mineral Resources ( ESDM ) of 7 in 2012 and No. 11 in 2011 , the Government authorized Mining Permit ( IUP ) and Special Mining Business Permit production operations are required to process the results of mining and refining in the country . However , these policies are not effective for still considered by some parties