January 2019 | Vol. 33
June 21, 2019
A dispute between the Papua provincial administration and PT Freeport Indonesia over a surface water tax has been resolved after Papua Governor Lukas Enembe met with Freeport Indonesia president commissioner Richard Adkerson at the Freeport McMoran headquarters in Phoenix, Arizona, United States.
The two parties agreed to a Rp 1.39 trillion (US$96.4 million) surface water tax, which was smaller than the amount the Papua administration wanted but bigger than what Freeport was initially willing to pay.
Adkerson, who was accompanied by Freeport Indonesia CEO Tonny Wenas, said that Freeport was not obliged to pay the tax the Papua administration had requested since 2011, as the Supreme Court had ruled in favor of Freeport in April last year. The Supreme Court freed Freeport from an obligation to pay roughly Rp 3.9 trillion in tax.
Previously, the tax court, which is a lower court than the Supreme Court, ruled in favor of the Papua administration concerning unpaid taxes of almost Rp 6 trillion.
“Based on the decision by Indonesia’s highest court, we are not obliged to pay the tax. However, Freeport and the Papua administration have good intentions for long term cooperation to support Freeport Indonesia’s operations for the sake of Papuans’ prosperity,” Adkerson said on Wednesday after meeting with Lukas.
Adkerson said Freeport would pay part of the disputed surface water tax from 2011 to 2018, which was Rp 1.39 trillion.
“[The tax] will be paid over three years, starting from 2019 to 2021,” Adkerson said last week.
In addition, starting from 2019, Freeport will pay an annual surface water tax of US$15 million per year, as regulated by its special mining business permit.
The tax dispute between the Papua administration and Freeport began in 2011. Freeport believed it only owed the tax stipulated in Bylaw No. 5/1990, which had a tax rate of Rp 10/m3, when the working contract was signed. Meanwhile, the Papua administration wanted Freeport to pay the tax stipulated in Bylaw No. 4/2011 on regional tax, which had a tax rate of Rp 120/m3.
Governor Lukas said the Supreme Court’s ruling that Freeport Indonesia did not need to pay any surface water tax should not be used an excuse by the company to not pay any taxes.
He said Freeport and Papua would issue a memorandum of understanding (MoU) in the near future that would detail the amount to be paid and the schedule of payment.
Source : Victor Mambor/the Jakarta Post, Monday, 13 May 2019 https://www.thejakartapost.com
June 21, 2019
After having grown by 2.5% in 2018, global copper production is expected to remain essentially unchanged this year, but will grow by 1.9% in 2020, the International Copper Study Group (ICSG) said in its ‘Copper Market Forecast for 2019/20’, released on Monday.
ICSG met with global copper industry stakeholders on May 9 and 10 to discuss key issues affecting the global copper market.
Global mine production increased by 2.5% in 2018, mainly owing to constrained output in 2017 and to an unusually low rate of overall supply disruptions in 2018.
Besides the restart of the Katanga mine in the Democratic Republic of Congo (DRC), no major new copper mine capacity was brought on stream in 2018.
This year, additional output from the start-up of the major Cobre de Panama mine, in Panama, the expansion of Toquepala mine, in Peru, and the commissioning of a few other small to medium mines is expected to be balanced by a significant decline in Indonesian output – owing to the transition of Grasberg to an underground operation and Batu Hijau mine to Phase 7 – and regulatory and taxation issues, which will negatively impact output in Zambia.
For 2020, the ICSG said, additional supply from mines in ramp-up and expansions that started in 2019, together with a recovery in Indonesian output, will support growth of about 1.9%.
Refined production, meanwhile, is expected to increase by around 2.8% this year and by 1.2% in 2020.
In 2018, global refined copper production was constrained by an unusually high frequency of smelter disruptions and temporary shutdowns for technical upgrades and modernisations.
This year, expanded electrolytic capacity in China, the ramp-up of electrowinning output in the DRC and the recovery from 2018 operational issues and maintenance at smelters in Australia, Brazil, Indonesia and Poland, besides others, will largely offset lower anticipated production at some plants in China and Europe, owing to planned maintenance shutdowns, and lower output in Chile and Zambia, owing to operational issues at smelters.
A rise of 2.8% is expected for this year but, in 2020, planned electrolytic refined production is likely to be constrained by tightness in the availability of concentrates, resulting in a limited increase of 1.2% in world refined production.
After a small decline in 2018, world secondary production from scrap is expected to recover in 2019 and 2020. China will remain the biggest contributor to world refined production growth in both 2019 and 2020.
Apparent Refined Use
The ICSG expects world apparent refined copper use to increase by around 2% this year and by 1.5% in 2020.
The organisation stated that sustained growth in copper demand should continue because copper is essential to economic activity and even more so to modern technological society.
Infrastructure development in major countries such as China and India and the global trend towards cleaner energy will also continue to support copper demand.
China will remain the biggest contributor to global growth in copper use. Although underlying “real” demand growth in China is estimated by some analysts to be around 2.6% this year, Chinese apparent demand is predicted to rise by 2%.
The outlook for the European Union and Japan remains sluggish for 2019 and 2020, with demand in the US continuing to rise this year, but levelling off in 2020.
Global use, excluding China, is expected grow by around 1.7% this year and by a further 2% in 2020, mainly supported by increases in the Middle East, India and some other Asian countries.
World refined copper balance projections indicate a deficit of about 190 000 t and 250 000 t for 2019 and 2020 respectively.
Source : Marleny Arnoldi/Creamer Media's Mining Weekly, Monday, 13 May 2019 https://www.miningweekly.com
Mining People on The Move
June 21, 2019
In the last-ditch global battle against climate change, China, Japan and South Korea have joined other industrialized nations in promising to reduce their use of fossil fuels.
Yet even as they take steps to promote renewable energy at home, these three countries are facing growing scrutiny for financing dozens of new coal-fired power plants in foreign countries.
Most of the plants are being built in Southeast Asia and Africa, in emerging economies where the growing demand for cheap, reliable electricity is most easily met by coal, the single largest source of the greenhouse gas emissions blamed for warming the planet.
Environmental groups accuse the three Asian giants of climate hypocrisy, arguing that their investments in effect export pollution, undermine their commitments under the 2015 Paris climate accord and continue to drive up carbon emissions.
Analysts say that as global markets shift toward renewable sources such as solar and wind power, whose prices are falling, governments in these countries are looking abroad to protect domestic companies that manufacture coal plants and supply equipment like steam turbines and boilers.
“The Chinese, Japanese and Koreans have a lot of coal-fired power equipment that will not have a great deal of international value in another three to five years,” said Melissa Brown, energy finance consultant at the Institute for Energy Economics and Financial Analysis. “So they’re looking to partner with countries that can move forward quickly to put new coal-fired power capacity in place.”
They have found willing buyers in countries such as Indonesia, Vietnam, South Africa and Bangladesh, where governments for now appear more concerned with building their economies and expanding access to electricity than with the environmental impact of burning more coal.
While demand for coal has flattened in China and declined in industrialized Western nations, its rise in the rest of Asia helped push carbon emissions up last year by 2% to the highest level ever recorded, according to the International Energy Agency.
Of about 67 gigawatts of new coal plants worldwide that are slated to receive foreign funding, more than 80% are being financed by China, Japan and South Korea, according to the advocacy group EndCoal.org.
China is by far the biggest player, having supplied or pledged $36 billion for coal plants in 23 countries, according to the IEEFA. The Chinese government has provided financing from state-run banks and included many of the projects in its colossal Belt and Road Initiative, which is designed to expand Beijing’s influence through investments in strategic foreign infrastructure projects.
Less attention has been paid to the overseas coal commitments of Japan and South Korea, which are primarily underwritten by export credit agencies — public lenders that provide government-backed loans to domestic companies doing business overseas.
Addressing the U.N. General Assembly last September, South Korean President Moon Jae-in touted his country’s plans to slash carbon emissions and “assist developing countries’ pursuit of sustainable development.”
But just two weeks before that speech, at an investment forum sponsored by Moon’s government, a South Korean construction company signed a $1.3-billion agreement to build two huge coal-fired power plants near the coastal Indonesian village of Suralaya, less than 70 miles from the smog-choked capital, Jakarta.
Indonesia, the world’s fourth-most populous nation, has embarked on a major infrastructure expansion under President Joko Widodo, known as Jokowi, who was reelected last month. A total of 16 gigawatts of new coal-based power — nearly the total electricity output of Colombia — is due to be financed by Chinese, Japanese or South Korean banks over the next decade, according to independent estimates.
For Indonesia, the deals offer a chance to tap foreign technology and know-how to exploit billions of tons of domestic coal reserves. The state-owned utility PLN, which owns a monopoly on power distribution, has lured Asian investors by entering into long-term agreements to purchase power from the new plants.
“There’s a clear preference for coal power in Indonesia, and that’s why the East Asian financiers are here — it’s a really attractive business proposition for them,” said Adhityani Putri, executive director of Yayasan Indonesia Cerah, a policy research group in Jakarta.
In 2017, Jokowi broke ground on the addition of two coal-fired plants to an eight-unit coastal power station near Suralaya on the northwest coast of the densely populated island of Java, a project dubbed Java 9 and 10.
Indonesian energy ministry officials described the new plants as environmentally friendly because they would adopt technology, known as “ultra-supercritical,” that burns less coal and generates less carbon dioxide. (Environmental groups argue that even these plants add emissions the planet can’t handle, making it almost impossible to meet the Paris agreement’s commitment to limit warming to “well below” 2 degrees Celsius.)
Energy industry analysts questioned the need for the additional generating capacity.
The plants would connect to the Java-Bali grid, which has a nearly 100% electrification rate, according to energy ministry figures. And financially troubled PLN, which has been slow to transition to renewables and survives on government subsidies, has said Indonesia already produces more electricity than consumers are demanding.
“Java 9 and 10 will do little to help the average Indonesian get access to electricity and will lead to wasted electrical capacity,” argued Market Forces, an Australian advocacy group that has campaigned against the power plants.
In 2017, Greenpeace highlighted the project’s potential to worsen air quality in Jakarta, one of Asia’s most polluted cities, which is perpetually shrouded in a toxic haze produced by auto exhaust, rampant burning of forests and emissions from eight existing coal power plants in the greater metropolitan region.
Still, plans for Java 9 and 10 moved forward. Throughout 2018, earth-moving equipment dug up a chunk of hillside next to the existing Suralaya power station and dumped it into the sea to create an outcropping of reclaimed land where the new units would sit.
The landfill covered a coral reef rich with grouper and lobster, said Salimuddin, head of a fishermen’s association in the nearby village of Salira, a cluster of tin-roofed houses set back from a dark-sand beach shadowed on both sides by power plants. A few hundred yards off the shore, coal barges float in the Java Sea.
Since the first factories were set up along the coast in the 1980s, Salimuddin, a 44-year-old who has only one name, said villagers have suffered from coughs and respiratory infections.
“We just accept it now,” he said. “The power companies set up a free clinic, so sometimes we go there for medication.”
Last November, after the land reclamation portion of the expansion was complete, PLN representatives came to brief villagers on the project, he said. By then, an Indonesian public-private partnership had already signed an agreement with South Korea’s Doosan Heavy Industries and Construction, one of the country’s biggest manufacturers of coal plants and equipment.
Doosan said the project would be bankrolled by two public financial institutions, the Export-Import Bank of Korea and the Korea Trade Insurance Corp. Together the two lenders have financed more than $10 billion worth of coal projects overseas since 2010, according to Solutions for Our Climate, a South Korean advocacy group.
But the financing has yet to come through, and there is no word on when construction will begin.
Part of the delay is due to Doosan’s failing financial health. Last year, the province that is home to South Korea’s biggest coal power plants said it would open no new coal facilities and accelerate the closure of existing ones. With the decline in domestic business, Doosan’s stock price has collapsed by about 75% from two years ago and its credit rating has been slashed.
The company, which employs 7,000 people, is selling off parts of its business to stay afloat, raising questions about its ability to complete the Indonesian project.
“It seems as if [Korean financing for] Java 9 and 10 is designed to help Doosan Heavy survive,” said Joojin Kim, managing director of Solutions for Our Climate.
Representatives of Doosan, the Korean banks and the Indonesian power companies did not respond to requests for comment.
Indonesia suspended several major coal projects last September due to a currency crunch and insufficient demand. But when the government released its 2019 energy plan, it included Java 9 and 10.
One analyst who spoke to Indonesian officials recently said they were “very aggressive” about completing the project.
Then, last month, the head of PLN, the Indonesian utility, was named as a suspect in a bribery investigation centering on a coal plant contract. Days later, the Korean construction giant Hyundai admitted paying a $460,000 bribe to a local Indonesian official to quell protests surrounding a coal power station it was building in Java.
Indonesian officials have said the corruption probes will not derail other coal projects. But activists hope the inquiries help persuade foreign investors of the need to divest from the industry.
The Korean banks’ “financing of coal projects in Indonesia is embarrassing and financially risky, because of air and climate pollution and corruption associated with the plants, and the fact that coal power is no longer a cheap source of energy due to continuously declining renewable energy prices,” Kim said.
“An accountable and transparent bank would not linger around risky projects like Java 9 and 10.”
Source : Shasank Bengali/LA Times, Monday, 13 May 2019 https://www.latimes.com
June 21, 2019
Five people have died after being buried by landslides at an illegal gold mine on Mount Pongkor, Bantar Karet village, Nanggung district, Bogor, West Java, on Sunday following hours of heavy downpours.
“Five unidentified bodies have been found while three people who survived were identified only as UUS, 35, Bantar Karet village resident Dede, 30, and Cisarua village resident Dika, 24,” spokesman of the National Disaster Mitigation Agency (BNPB) Sutopo Purwo Nugroho said on Monday as reported by tribunnews.com.
He said unstable soil structures combined with heavy rains triggered the landslides that buried dozens of miners. No specific data was provided on how many illegal miners were at the sites but Sutopo said there were around 20 miners working that night, according to information from locals.
A search and rescue team faced challenges in rescuing the victims as the landslide took place on very steep terrain.
“The field is very challenging and rescues could only be carried out manually,” Sutopo said, adding the team was assisted by volunteers and locals.
Bogor Police spokeswoman Adj. Comr. Ita Puspita Lena said the incident took place at around 10 p.m. on Sunday following heavy rain in Bogor. Soon after being notified about the incident, a joint team of local Police, the Indonesian Military (TNI) and locals rushed to the location and combed the area to find victims.
The search was halted due to bad weather and the search was continued on Monday.
Pongkor is known to attract miners who illegally search for gold despite lacking skills and proper tools. It was not the first fatal incident as 12 miners died after being buried by landslides in Pongkor in 2015.
Source : Theresia Sufa/The Jakarta Post, Tuesday, 14 May 2019 https://www.thejakartapost.com
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