The Asia Miner

OCT-DEC 2016

The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region

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46 | ASIA Miner | Volume 13 • Issue 4 | 2016 Events THE RTC - Mineral Processing 2016 seminar provided insights into the status of Indonesia's smelter program . The Mining Media organ- ised seminar was held in Jakarta on September 21 and 22, and was attended by about 100 . Independent geologist Ian Wollff was in attendance and provides the following comments: There were two clear opposing positions proposed by industry - to continue with a strong commitment to ban ore exports, or to change the regulations to allow/encourage certain raw ores and concentrates to be more easily exported . The pro raw nickel ore export ban position was well explained by Ste- ven Brown of Vale wherein allowing any nickel ore to be exported would enable China to produce nickel metal more cheaply than Indonesia and thereby continue to drive down prices and threaten the viability of the Indonesian smelter program . Alexander Barus, CEO of Morowali Industrial Park, provided an excel- lent outline of the $4 billion plant to smelt nickel, and is concerned any relaxation of the raw ore export ban would threaten the viability of this huge investment in Indonesia's future . Yudi Nurhadi of Antam outlined a rationale for allowing limited exports of raw nickel ore, wherein the new Indonesian smelters are accepting only high grade ores, thereby turning the low grade material into waste criterion, and in doing so reducing Indonesia's reserves and increasing mining costs . The presentation of Dendi Ramdani of Bank Mandiri also pointed out that Antam's nickel costs were below the international mar- ket price, and that Vale's costs were about even with the international price of nickel . Gusti Putu, Director General of metal and machinery from the Minis- try of Industry outlined the government's rationale that value adding by smelting could add many times the value of the raw ore, but ignored the cost of producing such ore . Bank Mandiri's review of costs and prices suggests that Antam's production costs of smelting nickel is not adding sufficient multiplier effect to cover the cost compared to selling price, and thus I may assume exporting raw ore is more profitable for them, compared to making nickel metal . Closure of the new South Kalimantan iron ore smelters is due to dif- ficulties in ore supply and low price, wherein the smelter owners (and banks) would prefer to restructure the industry to allow for a more se- cure and stable ore supply, and market competitive offtake . However iron ore miners were not represented at the seminar and it is under- stood they would like to have any market, including an export market . Price to feed smelters Another area of concern is that new nickel smelters are seen as dic- tating the ore price and grade, leaving little bargaining room for min- ers . There are government proposals to establish a domestic price for nickel ore delivered to smelters, based on the LME minus a freight component to China . However, in the South Kalimantan iron smelting industry, the iron ore miners cannot deliver their product to smelters at competitive low pric- es (and suitable quality) that will allow the smelters to sell their iron prod- ucts at market prices. Both miners and smelters want unjust local levies lifted and government support rather than hindrance for the industry . The various government ministries have accepted that mining prod- ucts pay a royalty on contained metal, whereas smelters pay VAT on production. This is not quite so easy for the Wetar project of PT Batutua Tembaga Raya that does not smelt but uses a world-first heap leach process to produce copper metal . Which minerals? Various speakers indicated that the present 'one size fits all' smelter policy is not optimal and that consideration should be given to industry realities . Herein the concept of strategic minerals was discussed, with some considering strategic minerals such as tin and nickel having suf- ficient volume to influence world prices, while others considered Indo- nesia's domestic needs (iron, aluminum, copper) should be promoted by the government to boost self reliance . Ego Syahrial, of the Geological Agency, and others indicated that government records of national mineral resources and reserves had not received much recent industry geological reports, and the reliability was highly variable . Thus the tabulation and map of national resources may be suitable for school children, but was less reliable for investors . The seminar reflected this resource uncertainty in the failure of the South Kalimantan smelters . There was general agreement that further reliable exploration is required to determine the nation's resources, and thus underpin policies on strategic minerals and smelting . To smelt or not to smelt in Indonesia RTCs help develop mining TECHNOLOGY has never been more important for mining in South East Asia as miners seek better and more cost-effec- tive ways to extract and process minerals while minimising the impact on environments and communities, and nations seek better value from resources . Mining Media International's Regional Technical Conference (RTC) series in 2016 has presented existing and new technol- ogies to the mining industry with a view to helping the indus- try become more sustainable . It has also given government bodies the opportunity to present the reasoning behind their mining policies . The RTC 2016 season has been described as a success by organisers, capped off by RTC – Mineral Processing in Jakar- ta on September 21 and 22, which attracted a strong crowd of people directly and indirectly involved with mining . Other events in the 2016 RTC series were RTC – Kalimantan Mining in Balikpapan on August 11, Sumatra Miner in Palembang from May 29-31 and RTC – Mining Vietnam in Hanoi on March 29 . RTC – Mineral Processing highlighted regulatory changes, domestic and overseas processed mineral demand and sup- ply forecasts, strategic moves by IUP holders to secure financ- ing, updated smelting and processing technologies as well as infrastructure challenges in building smelters. It also identified strategies and methods that will result in a proactive approach by all stakeholders to development of mineral processing in Indonesia .

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