Refining Sulawesia's Future
    Category: Big Build By : Michael Roddan Read : 2134 Date : Sunday, April 06, 2014 - 11:58:44


    When the government ban on the export of unrefined minerals went into effect at midnight on January 12, it sent most of the mining industry into a panic. Few miners had begun to even plan the building of a refining smelter in order to comply with the law. But Erwin Aksa, president director of PT Bosowa Corporindo, sees this moment as a great opportunity and is investing $430 million into smelters. “People underestimate what happened. They think government will change or soften the law. But the law is the law. We’ve been planning this for nearly two years,” says Erwin.

    The law, requiring minerals to be refined before export (Law No. 4/2009), was designed to develop a downstream industry and value-add to extracted resources—and as a cure to the Dutch disease many mineral-rich nations face.

    Though the law passed in 2009, reportedly only 28 companies have started construction on smelters out of 177 who submitted an interest. Erwin says the family owned Bosowa group would be the first private company, other than state-owned enterprises and multinational giants, to build a smelter.

    Bosowa, founded by Erwin’s father Aksa Mahmud, began life in automotive trading in South Sulawesi in 1973. The group now operates in diverse sectors such as cement, property, infrastructure, financial services, energy, media, and mining. Bosowa’s mining subsidiary, PT Bosowa Industri FeNi, has a 1,000 hectare concession to mine nickel in Konawe in Sulawesi, and will build its smelter, producing 25,000 tonnes of ferronickel annually in Punagaya, at the southern tip of Sulawesi. “South Sulawesi is our hometown, so we have to keep creating more growth,” says Erwin.

    Courtesy of Bosowa

    A last minute alteration of the law allowed continued export of some minerals, such as copper and iron ore, in concentrate form and with progressively increasing taxes as time passes. The amendment was seen as beneficial to the Indonesian operations of international mining giants Freeport and Newmont. Other minerals such as nickel and bauxite continue to face a full export ban.

    Erwin says Bosowa is against raw exports from Indonesia. “We are always thinking of developing the economy of the area in which we operate. Freeport and Newmont have the ability to build smelters—they have to consider developing such industry domestically,” he says.