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Jakarta (UPI) Jan 14, 2013
Indonesia's ban on exports of mineral ores has gone into effect, although 66 major mining companies are exempted from the ban for three years.
Most of Indonesia's miners have been exporting ores before processing. Regulations that took effect Sunday require bauxite, nickel, tin, chromium, gold and silver ores to be fully refined domestically prior to export, while copper, iron ore, lead and zinc concentrates may be exported with purification or if they are semi-processed.
Coal, the country's biggest mined export, is not included in the ban.
The Indonesian government passed a regulation Saturday night exempting 66 major mining companies -- including Freeport-McMoRan Copper & Gold Inc., based in Arizona, Newmont Mining Corp., based in Colorado -- from the ban until 2017.
Indonesian Energy Minister Jero Wacik said the law would "enhance the value" of the country's mining sector.
The government had introduced a law in 2009 requiring a ban on the export of unprocessed minerals starting Jan. 12, 2014. Because of confusion over the law and a dip in commodity prices, few miners have invested in refining plants, the Wall Street Journal reported.
Amid plunging currency and growing trade deficits, industry experts thought the Indonesian government would ease its stance on the ban.
In the meantime, countries such as China have stockpiled minerals like nickel in anticipation of a cut in supply, the Journal reported.
Indonesia is the world's second-biggest producer of nickel ore.
"More than 100 mining companies have been forced to reduce or shut down operations due to the uncertainty surrounding the mineral export ban," states an editorial in the Jakarta Globe Monday. "We hope the government has a plan on what to do with the hundreds of thousands of people who may become unemployed, as well as the millions who depend on them."
Indonesia's mineral shipments totaled $10.4 billion in 2012, around 5 percent of the country's total exports, says the World Bank.
While the mining sector has been Indonesia's single-largest source of foreign direct investment, the country was ranked as the worst place to do business out of 96 global jurisdictions last year in the Fraser Institute's annual survey of mining companies.
"The most significant metal producers shouldn't expect any negative impact," Bill Sullivan, a lawyer and mining industry adviser in Jakarta was quoted as saying by the New York Times. "The real story is how the government could have left it to the night before to come to grips with this. It's been an appalling failure of government policy making."
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