Not all things are going well in Indonesia… “Indonesian policies to force miners to process raw materials at home are misfiring, as disputes over the new rules disrupt plans to invest nearly $4 billion in copper smelters to cater for miners such as Freeport-McMoRan Copper & Gold,” reports Reuters.
“President Susilo Bambang Yudhoyono imposed a controversial mining law on January 12, but the rules have left the mining sector in turmoil. As well as a ban on unprocessed ore shipments, a last-minute export tax on concentrates was also brought in.”
“The tax ratchets up sharply before an outright export ban from 2017 and Freeport and Newmont Mining Corp, which produce 97 percent of Indonesia’s copper, have halted all exports and are locked in talks with the government because they say the tax breaches their contracts.”
“This has deepened uncertainty on plans to construct three copper smelters, since the firms building them say they need firm supply guarantees from Freeport and Newmont to put in place financing so they can proceed. Miners may have to slash output if there is not enough refining capacity once the export ban takes effect in 2017.”
“The impasse shows how a policy aimed at supporting higher value economic activity has not only stopped mineral exports but risks undermining the type of investment it was supposed to promote.”
“‘There is going to be another train wreck because there isn’t enough time to get approvals and build smelters before the new 2017 deadline,’ said Julian Hill, a Jakarta-based mining advisor at Deloitte Konsultan Indonesia. ‘The mining ministry is beginning to realize that they have created one hell of a mess and are looking for ways out of it.'”
In metal price news for copper…
Chinese copper bar saw a 1.0 percent decline this week, making it the week’s biggest mover on the weekly Copper MMI®. Following a 1.0 percent drop, the cash price of Chinese copper finished the week. Chinese copper wire fell 1.0 percent over the past week. Chinese bright copper scrap remained essentially flat from the previous week.
The Japanese copper cash price shifted up 0.3 percent to close this week. The price of US copper producer grade 122 remained unchanged for the week. Korean copper strip remained unchanged for the week. The price of US copper producer grade 102 traded sideways last week. The price of US copper producer grade 110 stayed essentially flat.
The primary copper cash price rose 0.4 percent on the LME over the past week to $7,185 per metric ton. Also on the LME, a 0.2 percent gain landed the copper 3-month price at $7,131 per metric ton.
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