Special Interview: Added-value on coal under discussion

The government is currently drafting a roadmap on industrialization that would regulate the development of downstream mining industry. Discussions are underway on how to generate greater added value from mineral ores and coal as mandated by the 2009 Mining Law. One of the policies which has been put in place is the requirement for mineral miners to build smelters to create greater added value ahead of the planned export ban on raw materials by 2014. CoalAsia?s Adianto P. Simamora talked to Trade Minister Gita Wirjawan on the ministry?s policy to deal with downstream business in the mining sector. Below is the excerpt of the interview.

Question: What is the role of the Trade Ministry to support downstream industry development program?

Answer: Downstream program will be regulated in a roadmap on industrialization. The existing road map will be jointly redefined by the Industry Ministry, Investment Coordinating Board (BKPM) and the Ministry for Energy and Mineral Resources. Other technical ministries, including the Trade Ministry will certainly support it. That?s the spirit.

There have been meetings at the Office of the Coordinating Minister for Economic Affairs along with other ministers including Finance Minister. We have agreed to support downstream industry as it is in line with the spirit stipulated under the 2009 Mining Law stating that downstream industry must have been materialized by 2014.

Thus, policies issued by the Trade Ministry must support downstream industry. One of the instruments that we usually use to support such spirit is the implementation of export duty. Of course, we will not go to drastic end of banning export of mineral products, but I think by imposing export tax on a number of mineral commodities, it is a good step to begin with.

We have a stick and carrot rule in it. The carrot I refer to is there would be several things that we can develop to invite investors to put their money in downstream industry.

The Mining Law regulates divestment of ownership in upstream industry. I think such divestment should not be applied to downstream sector and it seems the Office of the Coordinating Economic Minister and other ministers supported the idea to not impose the share divestment on downstream industry.

This will be one of incentives. In addition, the Finance Ministry is currently conducting analysis on possibility of fiscal policy as another incentive to push the development of downstream sector.

The Trade Ministry fully supports this although it may reduce export figure of raw materials, but we hope that in the future, export of processed mineral ores will gain more values. It will take two, three or four years to have processing plants or smelters constructed.

Read the complete report in August Edition of CoalAsia Magazine

Editing by Reiner Simanjuntak