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More smelters in Indonesia run under Mineral, Coal Law

Illustration of a mining site. (Photo by Dominik Vanyi on Unsplash)

Jakarta (Indonesia Window) – Managing mining businesses both formally and legally in Indonesia began in 1967 under Law No. 11 regarding the Principle Provisions on Mining.

For 42 years the law has regulated investment in mining activities, including processing and refining metals such as those done by PT Inco, PT Freeport Indonesia, and PT Kobatin, and PT Timah, PT Antam.

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During this period, activities on metal resources mining in Indonesia continued, but the value was no more than mining materials because they had not gone through further refining processes.

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Thus, Law No. 4 of 2009 concerning Mineral and Coal Mining was issued which obliged mining companies to increase the added value of the exploited minerals, and not to export minerals that had not been processed and refined domestically.

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Four years after the law was enacted, it was sued at the Constitutional Court and the World Trade Organization (WTO).

However, for the sake of achieving the people’s welfare in accordance with the mandate of the Constitution, the obligation to Increase Mining Value Added stated in the law still applies.

Since the completion of the derivative provisions in 2012, the mining law has encouraged the establishment of metal processing and refining facilities. In fact, in the last five years, Indonesia has become a major player in the nickel processing industry in the presence of these facilities.

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In 2012 Indonesia only had three smelter facilities, one for copper and two for nickel.

Six years later, 16 smelters are operational, and by 2020, 25 purification facilities are expected to be established.

In 2022, Indonesia is expected to have four copper smelters, 41 nickel smelters, 11 bauxite smelters, so that the total number of metal refining facilities will reach 68 units.

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Since the nickel smelter is operational, 25 million tons of nickel ores have been processed domestically and produce three million tons of FeNi (ferronickel) or NPI (nickel pig iron) with 10 percent nickel content or the equivalent of 319,200 tons of nickel metal in Indonesia.

Reporting by Indonesia Window

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