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TAMBANG, December 06, 2011 | 19.25
Nickel, It’s Ready To Welcome Added Value
Alamsyah Pua Saba
alam@tambang.co.id
Three nickel smelters are set to operate in 2014. It brings fresh wind to the upgrading of added value. Investors continue to come.
Early September 2011, President Susilo Bambang Yudhoyono (SBY) welcomed executives of Eramet and PT. Weda Bay Nickel, mining companies having nickel mining concession in Halmahera, Maluku Utara. At the meeting with the Head of State, one week after the celebration of Idul Fitri 1432 H, Eramet and Weda Bay Nickel, disclosed their plan to prepare investment amounting to US$3 billion for the development of nickel smelting project in the region.
The executives of Eramet and Weda Bay Nickel were, among others, Patrick Buffet (Chairman and CEO Eramet Group), Bertrand Marie Jean Claude Madelin (CEO Eramet Nickel), Alain Giraud (President Director of PT Weda Bay Nickel), Pierre Noyer (Corporate Director of PT Weda Bay Nickel), and Erry Riyana Harjapamekas (Commissioner of PT Weda Bay Nickel).
President SBY was accompanied by Coordinating Minister for Economy Hatta Rajasa, Minister of State Secretary Sudi Silalahi and Presidency Spokesperson Julian Aldrin Pasha. In the official web site of the Head of State, President SBY reportedly supports the intention of the companies to promote cooperation with PT. Aneka Tambang itu, to conduct much more investment in Indonesia, including the mining sector.
"Surely I support fully your intention to conduct much more investment in Indonesia," said President SBY upon welcoming his guests.
The US$3 billion investment, as disclosed by Coordinating Minister for Economy, is directed to not only investment but also housing, power plant, road and other supporting facilities. Mining only obtains a portion of ten percent of the total investment.
Patrick Buffet, Chairman and CEO of the Eramet Group said that the projects would absorb over 6,000 workers if the projects have worked and the number would increase in the construction phase. He also said that the total production of the nickel mining is expected to reach 65,000 tons. In the initial phase, the mining would produce 35,000 tons of nickel per annum and 30,000 tons in the second phase.
Nickel project Weda Bay controlled by Eramet (66.6%), Mitsubishi (33.4%) and Aneka Tambang (10%) has continued to encounter opposition from surrounding communities, represented by institutions, such as Jaringan Advokasi Tambang (Jatam) and Wahana Lingkungan Hidup (Walhi).
Nickel constitutes key material used in various metal processing industries and important mixture in the production of stainless steel. The end users of nickel are also varying, starting from household, shipping industry, construction, agriculture, electronic, defense, automotive, oil and natural gas to train. Demand for the commodity has continued to increase, ranging from four to five percent.
Indonesia, based on data released by the Directorate General of Minerals and Coal, produced 7,522,759 tons of nickel ores, 77,186 tons of Ni+Co in Matte and 18,688 metric tons of ferronickel in 2010.
However, the production was mostly destined to the export. The export volume was 6,393,145 tons for nickel ores, 70,379 tons for Ni+Co in Matte and 18,253 tons for ferronickel. The Indonesian market has not utilized the potential.
Viewed from deposits, Indonesia’s nickel is quite huge. Data at the Geology Board of ESDM Ministry (2010) show that Indonesia has nickel deposits around 2,633,500,434 billion tons and reserves around 576,914,000 tons, distributed in Sulawesi, mainly South and Southeast Sulawesi, Maluku and Kalimantan as well as other regions in Sumatra.
In relations thereto, the presence of investors, such as Eramet planning to invest in the mining sector, would contribute positively to the state because it would bring about multiplier effects to economy. In addition, new investment in mineral mining sector was almost nil in the last ten years.
Leading to Added Value
The presence of investors in the mining sector is very important to increase state revenue. The fact shows that the contribution of the mining sector to the state revenue has remained very small.
Prof. Didik J. Rachbini, in a discussion organized by the Indonesian Chamber of Commerce and Industry (KADIN) some time ago, said that the contribution of the mining sector to the state revenue is less than one tenth or only one percent of the total state revenue. It is quite ironical given that the mining potential is so huge in Indonesia.
The Chairman of the Economic Assessment, Research and Development Institute (LP3E) of Kadin cited the state revenue from the general mining is only Rp 15.4 trillion in APBN-P 2011, decreases to Rp 13.8 trillion in R-APBN 2012.
“The extremely small state revenue from the general mining is not irrational in view of the huge potential of natural resources. Rp 15 trillion are not sufficient for only one province,” he said.
In relations thereto, in a bid to drive up state revenue from the mining sector, the added value must be upgraded through domestic refinery or processing as mandated by Mining Law Number 4 Year 2009. The added value as required by the law could be obtained through the development of processing plant and smelter in the country so that the sold mining products are no longer raw goods, but products.
The commitment to increasing the added value of Indonesian mining products was also visible in discussion organized by the Energy and Mineral Resources Compartment of Kadin on September 19, 2011.
All of the present participants and speakers, either representatives of ESDM Ministry, Ministry of Industry, Perhapi and Kadin agreed that the added value of Indonesian mining becomes a must closed for compromise.
In addition, regulation through Law Number 4 Year 2009 has mandated that valued added upgrading must be executed through refinery and processing in no later than five years following the ratification of the law. It means, smelter and processing plant must have been built in 2014 and raw material would not be exported.
In the meantime, Tatang Sabaruddin, Director of Mineral and Coal Program Development, presented the latest condition of the processing of Indonesian mining commodities. He said that commodities have been processed in the country. They include mining output of two American companies, Freeport Indonesia and Newmont Nusa Tenggara, mainly commodities containing copper, gold and silver. Some 30% of the production has been processed in PT. Smelting Gresik, into copper cathode and by product (anoda slime).
Gold and copper ores are also processed wholly into gold and silver metals, like what is executed by Antam, Nusa Halmhera Mineral as well as Natarang Mining. So are tin ores, wholly processed into tin metal, already executed by PT Timah, Kobatin and tin producers in Kepulauan Bangka Belitung.
Nickel ores have also been processed further into ferronickel by Antam and nickel matte by Inco, later exported in the form of nickel ores.
Tatang also disclosed condition of several main minerals not yet processed in the country but exported directly in the form of raw materials. Among them are iron ores, iron sand, bauxite and manganese.
In the case of nickel, said Tatang, Antam has a capacity to process nickel ores into ferronickel as much as 2,950,000 tons, while the capacity of Inco to process nickel matte is 6,080,000 tons. In addition, he said, there is a plan to increase the processing capacity of nickel ores, from among others, Weda Bay Nickel Project, set to produce in 2016 with a capacity of 6,000,000 tons, Nickel pig iron by Antam with a capacity of 900,000 tons, starting to produce in 2014, later Feronickel project of Antam, also planning to produce in 2014 with a capacity of 2,950,000 tons so that the total processing capacity of nickel would increase to 18,880,000 tons.
He also said that, viewed from the total nickel production 26,380,000 tons, there is a potential to process 7,500,000 tons of nickel ore to balance the production and processing.
Disincentive and Incentive
In the meantime, Panggah Susanto, Director General of Manufacturing Industry Basic of the Ministry of Industry, said that his side recommends two proposals, namely disincentive and incentive to facilitate the upgrading of the added value of mining commodities.
The disincentive, he said, is in the form of the ban or restriction of metal mineral export to assure the availability of raw materials of manufacturing industry producing products having high added value in the country.
In the meantime, the incentive is in the form of the granting of tax holiday and tax allowance to boost the growth of upstream and intermediate or pioneer industries badly needed to strengthen national industrial structure.
The recommended disincentive needs to be applied before 2014 by means of enforcing the obligation of mineral products to undergo export verification, besides imposing a high rate of export tax to prevent the export of nickel ores.
In the meantime, the recommended incentive in the form of tax holiday or tax allowance, according to him, is granted in the form of income tax facility for industry investing in the development or expansion of nickel smelter and processing of nickel allot with the minimum investment value US$50 million by means of revising PP Number 62 Year 2008 regarding tax allowance.
Apart from that, it is also necessary to provide the facility of exemption or reduction of income tax on integrated industry, starting from the processing of nickel ores to intermediate products. There is also the exemption or reduction of income tax on entities, according to PMK Number 130/PMK.011/2011 for the minimum investment of Rp 1 trillion (tax Holiday).
“Therefore, downstream nickel industry processing ferronickel into stainless steel could grow after 2014,” he said.
Sharing the same view as Tatang, he said that nickel smelters would be built and expected to start operating in 2014. Any of the projects belong to Antam in Halmahera with a production capacity of 27,000 tons and investment amounting to US$1.6 billion. The processing facility, he said, needs nickel ores around 100,000 tons per annum.
Next is a nickel processing facility in Pomala, Southeast Sulawesi, also belonging to Antam with a production capacity of 120,000 tons and investment amounting to US$486 million. The project would need nickel ores around 400,000 tons per annum.
The other is Nickel Pig Iron (NPI) project in Mandiodo, Southeast Sulawesi, also executed by Aneka Tambang with a production capacity of 120,000 tons of NPI, and needs nickel ores around 400,000 tons per annum. The project costs around US$398 million.
In view of the growth of nickel processing industry and smelter, he is optimistic that nickel becomes a mining product that would contribute bigger added value.
Nickel, It’s Ready To Welcome Added Value
Patrick Buffet
alam@tambang.co.id
Three nickel smelters are set to operate in 2014. It brings fresh wind to the upgrading of added value. Investors continue to come.
Early September 2011, President Susilo Bambang Yudhoyono (SBY) welcomed executives of Eramet and PT. Weda Bay Nickel, mining companies having nickel mining concession in Halmahera, Maluku Utara. At the meeting with the Head of State, one week after the celebration of Idul Fitri 1432 H, Eramet and Weda Bay Nickel, disclosed their plan to prepare investment amounting to US$3 billion for the development of nickel smelting project in the region.
The executives of Eramet and Weda Bay Nickel were, among others, Patrick Buffet (Chairman and CEO Eramet Group), Bertrand Marie Jean Claude Madelin (CEO Eramet Nickel), Alain Giraud (President Director of PT Weda Bay Nickel), Pierre Noyer (Corporate Director of PT Weda Bay Nickel), and Erry Riyana Harjapamekas (Commissioner of PT Weda Bay Nickel).
President SBY was accompanied by Coordinating Minister for Economy Hatta Rajasa, Minister of State Secretary Sudi Silalahi and Presidency Spokesperson Julian Aldrin Pasha. In the official web site of the Head of State, President SBY reportedly supports the intention of the companies to promote cooperation with PT. Aneka Tambang itu, to conduct much more investment in Indonesia, including the mining sector.
"Surely I support fully your intention to conduct much more investment in Indonesia," said President SBY upon welcoming his guests.
The US$3 billion investment, as disclosed by Coordinating Minister for Economy, is directed to not only investment but also housing, power plant, road and other supporting facilities. Mining only obtains a portion of ten percent of the total investment.
Patrick Buffet, Chairman and CEO of the Eramet Group said that the projects would absorb over 6,000 workers if the projects have worked and the number would increase in the construction phase. He also said that the total production of the nickel mining is expected to reach 65,000 tons. In the initial phase, the mining would produce 35,000 tons of nickel per annum and 30,000 tons in the second phase.
Nickel project Weda Bay controlled by Eramet (66.6%), Mitsubishi (33.4%) and Aneka Tambang (10%) has continued to encounter opposition from surrounding communities, represented by institutions, such as Jaringan Advokasi Tambang (Jatam) and Wahana Lingkungan Hidup (Walhi).
Nickel constitutes key material used in various metal processing industries and important mixture in the production of stainless steel. The end users of nickel are also varying, starting from household, shipping industry, construction, agriculture, electronic, defense, automotive, oil and natural gas to train. Demand for the commodity has continued to increase, ranging from four to five percent.
Indonesia, based on data released by the Directorate General of Minerals and Coal, produced 7,522,759 tons of nickel ores, 77,186 tons of Ni+Co in Matte and 18,688 metric tons of ferronickel in 2010.
However, the production was mostly destined to the export. The export volume was 6,393,145 tons for nickel ores, 70,379 tons for Ni+Co in Matte and 18,253 tons for ferronickel. The Indonesian market has not utilized the potential.
Viewed from deposits, Indonesia’s nickel is quite huge. Data at the Geology Board of ESDM Ministry (2010) show that Indonesia has nickel deposits around 2,633,500,434 billion tons and reserves around 576,914,000 tons, distributed in Sulawesi, mainly South and Southeast Sulawesi, Maluku and Kalimantan as well as other regions in Sumatra.
In relations thereto, the presence of investors, such as Eramet planning to invest in the mining sector, would contribute positively to the state because it would bring about multiplier effects to economy. In addition, new investment in mineral mining sector was almost nil in the last ten years.
Leading to Added Value
The presence of investors in the mining sector is very important to increase state revenue. The fact shows that the contribution of the mining sector to the state revenue has remained very small.
Prof. Didik J. Rachbini, in a discussion organized by the Indonesian Chamber of Commerce and Industry (KADIN) some time ago, said that the contribution of the mining sector to the state revenue is less than one tenth or only one percent of the total state revenue. It is quite ironical given that the mining potential is so huge in Indonesia.
The Chairman of the Economic Assessment, Research and Development Institute (LP3E) of Kadin cited the state revenue from the general mining is only Rp 15.4 trillion in APBN-P 2011, decreases to Rp 13.8 trillion in R-APBN 2012.
“The extremely small state revenue from the general mining is not irrational in view of the huge potential of natural resources. Rp 15 trillion are not sufficient for only one province,” he said.
In relations thereto, in a bid to drive up state revenue from the mining sector, the added value must be upgraded through domestic refinery or processing as mandated by Mining Law Number 4 Year 2009. The added value as required by the law could be obtained through the development of processing plant and smelter in the country so that the sold mining products are no longer raw goods, but products.
The commitment to increasing the added value of Indonesian mining products was also visible in discussion organized by the Energy and Mineral Resources Compartment of Kadin on September 19, 2011.
All of the present participants and speakers, either representatives of ESDM Ministry, Ministry of Industry, Perhapi and Kadin agreed that the added value of Indonesian mining becomes a must closed for compromise.
In addition, regulation through Law Number 4 Year 2009 has mandated that valued added upgrading must be executed through refinery and processing in no later than five years following the ratification of the law. It means, smelter and processing plant must have been built in 2014 and raw material would not be exported.
In the meantime, Tatang Sabaruddin, Director of Mineral and Coal Program Development, presented the latest condition of the processing of Indonesian mining commodities. He said that commodities have been processed in the country. They include mining output of two American companies, Freeport Indonesia and Newmont Nusa Tenggara, mainly commodities containing copper, gold and silver. Some 30% of the production has been processed in PT. Smelting Gresik, into copper cathode and by product (anoda slime).
Gold and copper ores are also processed wholly into gold and silver metals, like what is executed by Antam, Nusa Halmhera Mineral as well as Natarang Mining. So are tin ores, wholly processed into tin metal, already executed by PT Timah, Kobatin and tin producers in Kepulauan Bangka Belitung.
Nickel ores have also been processed further into ferronickel by Antam and nickel matte by Inco, later exported in the form of nickel ores.
Tatang also disclosed condition of several main minerals not yet processed in the country but exported directly in the form of raw materials. Among them are iron ores, iron sand, bauxite and manganese.
In the case of nickel, said Tatang, Antam has a capacity to process nickel ores into ferronickel as much as 2,950,000 tons, while the capacity of Inco to process nickel matte is 6,080,000 tons. In addition, he said, there is a plan to increase the processing capacity of nickel ores, from among others, Weda Bay Nickel Project, set to produce in 2016 with a capacity of 6,000,000 tons, Nickel pig iron by Antam with a capacity of 900,000 tons, starting to produce in 2014, later Feronickel project of Antam, also planning to produce in 2014 with a capacity of 2,950,000 tons so that the total processing capacity of nickel would increase to 18,880,000 tons.
He also said that, viewed from the total nickel production 26,380,000 tons, there is a potential to process 7,500,000 tons of nickel ore to balance the production and processing.
Disincentive and Incentive
In the meantime, Panggah Susanto, Director General of Manufacturing Industry Basic of the Ministry of Industry, said that his side recommends two proposals, namely disincentive and incentive to facilitate the upgrading of the added value of mining commodities.
The disincentive, he said, is in the form of the ban or restriction of metal mineral export to assure the availability of raw materials of manufacturing industry producing products having high added value in the country.
In the meantime, the incentive is in the form of the granting of tax holiday and tax allowance to boost the growth of upstream and intermediate or pioneer industries badly needed to strengthen national industrial structure.
The recommended disincentive needs to be applied before 2014 by means of enforcing the obligation of mineral products to undergo export verification, besides imposing a high rate of export tax to prevent the export of nickel ores.
In the meantime, the recommended incentive in the form of tax holiday or tax allowance, according to him, is granted in the form of income tax facility for industry investing in the development or expansion of nickel smelter and processing of nickel allot with the minimum investment value US$50 million by means of revising PP Number 62 Year 2008 regarding tax allowance.
Apart from that, it is also necessary to provide the facility of exemption or reduction of income tax on integrated industry, starting from the processing of nickel ores to intermediate products. There is also the exemption or reduction of income tax on entities, according to PMK Number 130/PMK.011/2011 for the minimum investment of Rp 1 trillion (tax Holiday).
“Therefore, downstream nickel industry processing ferronickel into stainless steel could grow after 2014,” he said.
Sharing the same view as Tatang, he said that nickel smelters would be built and expected to start operating in 2014. Any of the projects belong to Antam in Halmahera with a production capacity of 27,000 tons and investment amounting to US$1.6 billion. The processing facility, he said, needs nickel ores around 100,000 tons per annum.
Next is a nickel processing facility in Pomala, Southeast Sulawesi, also belonging to Antam with a production capacity of 120,000 tons and investment amounting to US$486 million. The project would need nickel ores around 400,000 tons per annum.
The other is Nickel Pig Iron (NPI) project in Mandiodo, Southeast Sulawesi, also executed by Aneka Tambang with a production capacity of 120,000 tons of NPI, and needs nickel ores around 400,000 tons per annum. The project costs around US$398 million.
In view of the growth of nickel processing industry and smelter, he is optimistic that nickel becomes a mining product that would contribute bigger added value.
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