One of the quandaries affecting Indonesia today is dismal global coal value, forcing producers to sell their products at a disappointing price just to continue operations. Adding to the damage is the unprocessed minerals ban, as miners are losing a lot from additional tax imposed on selling to foreign customers.
There’s an unspoken theory that the Indonesian government will rotate export to meet local demands as it ramps up domestic coal-fired power generation. But the country seems more concerned on empowering its own local coal segment before anything else, the reason why the country is viewed by the global market as the “white knight” of the dwindling supply sector.
The truth is, some economists say that the “white knight” of the global market can’t even save itself from supply issues. As prices continue to decline, local producers cannot even afford to take the cost-cutting route. A massive operations shutdown is predicted for the local market if prices fail to improve through the year, or if the government will not make any substantial move to fix the problem.
Domestication is also affecting many sectors such as gas, bauxite, copper, and nickel. Although a large percentage of local miners are doing their best to cope with and adhere to the local smelting regulation, some still find the ban a hindrance to their growth. Some mining companies are forced to pay the exorbitant leeway tax just to sell their products abroad and to avoid stockpiling.
From a global perspective, however, the Indonesian ore ban is an essential entity in keeping industrial commodities’ prices relevant. Lifting the ban would pull base metal prices down, which, theoretically, will be a major predicament given the segment’s current prices. Since the beginning of 2015, the base metals segment has never been close to its 2014 performance, which is considered to be the segment’s best since the global recession in 2009.
For base metal producers with promising production volume, the ban is also essential in maintaining their significance to consumers and investors.
For consumers, which include stainless steel producers and construction firms, the large amount of commodities suggests that they will no longer have to be anxious about the dwindling supply. From an investor’s standpoint, this is important because these companies’ future contribution to the global market could augment their stock value, as well as their reputation as a global mining brand. Nascent Russian company Amur Minerals Corporation (LON:AMC), for instance, obtained massive industry attention when it announced its pre-production license application last year, which was intensified more when it obtained the government’s approval last month.
According to the World Bank, although Indonesia’s economy will manage to obtain stability over the next two years, it will still face pressures from lower global coal prices, as well as from other commodity items such as palm oil, gas, and rubber. This means that Widodo’s dream of making his country one of the top economies in the Asia-Pacific region might take him several more years, and that his government should consider taking a second look at the efficacy and repercussions of the ban from a long-term, global perspective.
Is the recession upon us? Think global synchronized bond collapse
What is hardware inventory software?
Stock market crash advice for robo-advisor investors
Why being a silver entrepreneur makes a good decision post-retirement
NBA players increasingly use platform to voice stance on national issues
Cannabis acceptance grows as hemp industry leader PotNetwork Holding breaks CBD sales records
This fast-growing organic products stock already has space on Whole Foods’ shelves
Why Vapor Group Inc. might be the breakout penny stock you’ve been looking for in 2018
The CBD industry is enjoying a boost from the lifestyle sector
When you should consult your financial advisor
Promoting women’s football in Malta by UEFA projects
Euro NCAP marks its 20th anniversary with two crash tests
European Parliament’s International Trade Committee backs CETA
The American Heart Association has released four new PSAs
PwC presents 20th global CEO survey results in Switzerland
Crypto2 days ago
Could Global Blockchain Technologies change the way we invest in cryptocurrency?
Crypto3 days ago
One of America’s oldest gold mines enters the crypto-century
Featured4 days ago
CBD stocks emerge strong in the growing cannabis industry, marijuana legalization
Featured2 days ago
This hemp market player’s growth is about to go into overdrive
Featured3 days ago
The gig economy has matured — when will the business world catch up?
Business5 days ago
Disney announces price hikes for Disneyland tickets in the US
Business4 days ago
Delving deeper into the Internet of Things
Business2 days ago
Why is it becoming harder for millennials to be homeowners?