Mineral and Coal Industry Outlook 2018

INDUSTRY.co.id - Jakarta - The year 2018 is also a continuation of the Government's efforts to resolve the negotiations with Freeport, where the divestment issue is still awaiting the outcome of negotiations with the Ministry of Finance and the Ministry of SOEs.

The year 2017 became one of the important years of the sub-sector of Mineral and Coal (Minerba) sectors of the Ministry of Energy and Mineral Resources (ESDM).

The issuance of Government Regulation (PP) No. 1 of 2017 on the Implementation of Mineral and Coal Mining Business Activities and its derivatives shows the Government's definite steps in guarding the downstream policy of minerba, 51 percent divestment and the restructuring of the Special Mining Business License (IUPK) as a reaffirmation of the utilization of natural resources as much as possible for the welfare of the people.

Director General of Minerba, Bambang Gatot Ariyono, in the presentation of Minerba Subsector 2017 and Outlook 2018 at the Office of the Ministry of Energy and Mineral Resources, Jakarta last January, said the landmark important points of PP (Number) 1 year 2017 are related to mineralization, divestment and IUPK.

From year to year several times published regulations for downstream. In addition to increasing state revenues, downstream also encourages increased employment and ultimately encourages national economic growth, "he said

According to him, the PP is then followed up by the issuance of several Ministerial Regulations (Permen) that support business certainty in order to encourage akslerasi coupled with control and incentive measures provided by the Government.

"Even in 2017, Reference Minerals Price (for 20 types of metallic minerals) is determined as a variable determination of HPM (Mineral Reference Price) through Minister of Energy and Mineral Resources Regulation No. 44 of 2017," said Bambang.

Related to the Revision of Law No. 4 of 2009 on Minerba, Bambang hopes to be completed this year. "Revision of Law 4 is expected to be completed this year and we will also evaluate some of the simplified Candy into one candy only," he continued.

Other positive incidents were also listed in the Minerba sub-sector including Non-Tax State Revenue (PNBP) exceeding the 2017 APBNP target, achievement of PKP2B Contract amendment, Clear and Clean Mining Business License (IUP), reclaimed ex-mining land, processing and refining of minerals (smelters) to the progress of the Government's negotiations with Freeport.

In 2017 the Minerba Sector listed PNBP of Rp 40.6 trillion or 125% of the 2017 Budget target (Rp 32.7 trillion) and increased 48.3% of PNBP in 2016 (Rp 27.2 trillion). The composition of minerba revenues consists of royalties Rp 23.2 trillion, fixed contribution Rp 0.5 trillion and sales of mining products amounting to Rp 16.9 trillion.

Related to the amendment of the contract, whether it is the Coal Mining Concession Working Agreement (PKP2B) or the Contract of Work (KK), Bambang admitted that this adjustment in its journey is not easy and requires its own effort, especially in the CoW, the issue of divestment and state revenue is still a constraint.

"Until early 2018, PKP2B (50) amendments finished 50 leaving 18 which will be cultivated by the end of this January .The time schedule is slightly backed up, just a few, the rest of the 18 companies will be signed soon," he said.

Finally, in 2017, Korsup KPK Forum and Directorate General of Mineral and Coal Mining resulted in the revocation of 2,595 IUPs by the Regional Government in the period 2015-2017 so that starting in 2018 all IUP in Indonesia as many as 6,565 IUP is a CnC status.

Finalization of IUP arrangement has agreed to freeze (block) the IUP which is still non CnC status by Directorate General of AHU, Directorate General of Customs and Directorate General of Dairy based on data from Directorate General of Mineral and Coal.

"The process is already underway, there are several things that must be improved, such as constrained problems of corporate blocks, we will immediately clarify so that it can be revised from being blocked," said Bambang.

On that occasion, Bambang also explained that the national coal production in 2017 reached 461 million tons, while the production target of 2018 rose 5% from the realization of 2017. This production is prioritized to guarantee the fulfillment of domestic primary energy source.

Recorded 2017 domestic coal utilization reached 97 million tons, has not met the target (121 million tons) due to the lack of operation of power plant and industry that previously expected to absorb coal production.

The positive achievement was recorded by the reclamation activity of ex-mining land where the realization of 2017 reached 6,808 hectares.

"The placement of reclamation guarantee funds into a unified mining process, targeting the reclamation area to 6,900 hectares next year," said Bambang.

For the development of smelter, Bambang revealed until 2017 already 24 companies that have completed the construction of smelters, where 26 other companies are still in development progress.

Total, has been built smelter as many as 50 companies from 6 commodities, with the most commodity nickel.

"Metal nickel is well developed, (smelter) that has been completed 100% includes nickel 15, bauxite 2, copper 1, iron 4, and manganese 2. Progress 50-100% ie nickel 3, iron 1, lead and zinc 1. While progress 0-50% consists of nickel 12, bauxite 4, copper 2, iron 1, lead and zinc 2," said Bambang.

The year 2018 is also a continuation of the Government's efforts to resolve the negotiations with Freeport, where the divestment issue is still awaiting the outcome of negotiations with the Ministry of Finance and the Ministry of SOEs.

In further technical negotiations, the EMR Ministry's duties include the construction of refining and refining facilities, the legal basis of operations and the extension of operations. Now these three things are done.

"We hope that this divestment issue can be completed before July (2018), so it can be realized the mandate of Law 4/2009 and PP 1/2017," added Bambang.