On January 12, the ban on exports of unprocessed minerals provided by the mining law passed in 2009. Although passed in a lightened version compared to the provisions of the original text, the legislation provides for the introduction of a25% tax on mineral exports which will increase every 6 months reaching 60% in 2017. They will be exempt from the ban, for a limited period of time, all companies that will start the construction of foundries or processing plants on Indonesian territory. This initiative denotes the will of the local government to develop a national mineral processing industry with higher added value by increasing the employment rate, shifting production to higher segments of the value chain and attract investments in the sector of transformation of extracted raw materials. The minerals that can no longer be exported, unless they have undergone a refining or transformation process on site, are: bauxite, nickel, tin, chromium, gold and silver. Coal, natural gas and crude oil, which are the main commodities exported by the country, will not be subject to the ban for the time being.
Mineral exports in 2012 (excluding crude oil and natural gas) amounted to about 31 billion dollars, equal to 16,6% of total Indonesian exports. The country supplies the 3% of the world's copper, between 18% and 20% of nickel and about 10% of bauxite. Considering the importance that the Indonesian mining sector covers for the economy of the archipelago and for the countries consuming raw materials (such as China, the main importing country of Indonesian nickel), the measure that has just entered into force will have repercussions not only on public accounts and the commodity market involved, but also on the internal political implications, faced with the fate of an extractive industry that will have toà be balanced by the creation of more jobs in the processing of the minerals themselves. A compromise that represents the best strategyù between the national interest for the protection of natural resources and the interests of foreign investors active in the mining sector becomes a must.
From this point of view, the entry into force of the standard could affect the trade balance by widening its deficit due to lower exports of raw minerals and higher demand for capital goods functional to the development of a local mineral processing industry. Therefore, an increase in imports of these goods. The scenarios identified by the World Bank and illustrated by the SACE focus envisage a neutral impact of the regulation as of 2015 in case all processing plants are realistically operational as early as this year, during which the country will experimentà a moderate current account deficit. Hypothesis which, of course, would get worse if in the number of activitiesà production in the short term is reduced more and moreù, ahead of a recovery in exports of processed minerals. All of thatò would do nothing but increase the financing needs of a country already dependent on foreign capital inflows, in terms of both portfolio investment, which are the mostù sensitive to policy changes, both of IDE. Indeed, such capital flows could be discouraged by more restrictive regulation, with repercussions on the price of the commodities themselves, whose return on the financial markets would depreciate to the advantage of competing markets. It would therefore be necessary to see if the foreign companies in the sector, faced with the lack of productive investments that counterbalance the developments in the mining sector, are not in all this incentivized to establish processing plants on site, after comparing the processing costs of less valuable metals than those in Indonesia. With considerable advantages for the consumer market (and, therefore, the local population) and the investors themselves, given the position of leader in the Indonesian subsoil. All a matter of foresight.
