US$500 Million loses and 'quip' is not beautiful same [look at] Instagram

Ridge Camp 72 Superblock - Papua, 6.14pm

In every country in the middle [heated] election, too often several issues look forgotten. Until last Wednesday, the public in Indonesia just showed a ‘view’ that [both] the Indonesian government and Freeport ‘hepi-hepi aja’, showed a view that [both] were very happy with each other. Indonesia minister Erick Thohir, nearly to be a VP candidate but failed, shows [via Instagram] laughter together with Richard Adkerson and Kathleen Quirk. The [bitter] fact: potential losses for the Indonesian government until US$501 million.

US$501 million cumulative fine

Erick Thohir reported that the mining giant PT Freeport Indonesia’s (PTFI) smelter in Gresik, East Java is a clear indication of the government's seriousness in carrying out downstream.

Erick made the statement when accompanying President Joko Widodo or Jokowi to inaugurate the expanded copper smelter today, Dec. 14. “Although some people do not understand the urgency of the downstream policy, President Jokowi takes the right steps and in fact, it must be done,” Erick said in his statement on Thursday.

The minister noted that downstream is one of the government’s commitments to ensure that the country's mineral resources are utilized sustainably. With the natural resources gradually depleting, Indonesia cannot continue selling raw materials without any value addition so downstream processing is a vital step towards creating more jobs and technology transfer.

“If people are protesting against downstream and want us to continue selling raw materials, I think their nationalism needs to be questioned,” he added.

According to Erick, the smelter has a total refining capacity of 1.3 million tons, making it the largest single smelter design in the world. Furthermore, the construction of this new copper smelter with a capacity of 1.7 million tons per year and a precious metals refinery (PMR) with a capacity of 6,000 tons per year was expected to be completed by May 2024. As of November 2023, construction progress has reached 82.74 percent. 

Citing from its official website, PT Smelting Gresik is PT Freeport Indonesia's first copper smelter built in 1996. PTFI then started the construction of the Manyar smelter in 2021. The construction of this smelter is part of the requirements for PTFI to extend its special mining business permit or IUPK, which will enable the company to extend its operating rights in the Grasberg mineral mining area in Papua until 2041.

Freeport McMoran actually ‘built’ a city from scratch since it started the operation in the 70s, named TEMBAGAPURA, a very western-style of mining town. Arguably [in total revenue and investment] Freeport McMoran to be the biggest foreign revenue for Indonesia [on a complicated calculation  share of revenue, annually]. Both the US and Indonesia have the same bigger picture: Freeport presence in Indonesia is strategic, irreplaceable, and must continue at whatever cost. 

Because it is very crucial for ‘Jokowi’ Joko Widodo to ensure the development of a new capital city, he try fix everything as he can. If the US government, which already has a huge compound in Jakarta [already renovating the US Embassy building], agrees to build [again] new embassy in new capital city, this is a major - significant trigger for both foreign governments and foreign companies to invest in Capital City.

2 Weeks ago, Bara Krishna Hasibuan, long-time economic adviser for MANDATE NATIONAL PARTY / PARTAI AMANAT NASIONAL, and currently special advisor Indonesia Trade Minister [because Minister of Trade is Zulkifli Hasan, Chairman of PAN, same political party like Pak Bara], in Timika, just miles from mining site companies Freeport Indonesia or Freeport McMoran, confirmed that the Indonesia Government [re]submit or initiate WTO dispute complaint regarding EU imposed stainless-steel cold-rolled. From Indonesia side, claimed that suffered annual losing 40 million euro because of EU decision imposed stainless-steel cold-rolled.

For trackback, actually January 26th, 2023, nearly 11 months ago, Indonesia has requested WTO dispute consultations with the European Union regarding EU anti-dumping and countervailing duties imposed on imports of stainless steel cold-rolled flat products from Indonesia. The request was circulated to WTO members on 26 January, 2023.

The worldwide for even exploration and mining starts roughly significant dependence to Indonesia, around 8 per cent supplies of stainless steel cold-rolled flat products for global demand from Indonesia.

Downstreaming is Jokowi's strategy to increase the added value of Indonesian commodities. ownstreaming means that the exported materials are no longer raw but have become semi-finished goods. In other words, Indonesia no longer ships natural wealth per se but processes these raw materials domestically. In this way, new jobs can also be created in the country.

However, the European Union has protested Jokowi's policy, because it believes the ban will harm the EU’s stainless-steel industry. Indonesia however remains adamant. So in 2019, the EU asked the WTO to mediate on this issue. The panel confirmed the EU's claims that Indonesia's actions were inconsistent with WTO rules on free trade.

However several times the WTO in theory fights monopoly but in practice opens up the markets of countries in the Global South for the benefit of countries in the North.

May 9th, 2023, or 7 months ago, in Strasbourg to celebrate European Day (Europa Tag), Chancellor Olaf Scholz calls for "swift" conclusion of EU trade deals with Mercosur (Mercado Común del Sur; Souther Common Market), Mexico, India, Indonesia, Australia and Kenya.

Continued negotiations "for years without results" will lead to others dictating future rules on environmental and social standards, he warns. Germany might hand out more subsidies to boost its companies and help with high energy prices. Scholz added “we need to conclude more trade agreements so that we as the EU continue to set global rules. These agreements need to be fair, for example by making sure the first processing of critical raw materials happens in the partner countries.”

“These must be "fair agreements that support our partners economic developments [Indonesia, Mercosur, etc) rather than hindering it. Political heavyweights are appearing in Asia (Indonesia, China, India), who have raised a billion people out of poverty," Chancellor Scholz added.

Around 3 weeks after Scholz speech, May 22, 2023, World Trade Organization agreed to establish a panel to help settle a row between Indonesia and the EU over tariffs which the bloc has slapped on stainless steel products. The WTO's Dispute Settlement Body decided to examine the countervailing and anti-dumping measures Brussels has imposed on imports of stainless-steel cold-rolled flat products from Indonesia, a Geneva-based trade official said. Indonesia claims the measures are inconsistent with a long line of international trade rules and filed a complaint in January.

Indeed, since the time of colonialism, raw materials have been sought after by imperialist countries. The raw materials were then processed by countries in the North, & these processed goods were sold in the colonies, usually at inflated rates. In this way, the colonized countries would become dependent on their colonizers. After these countries became independent, economic oppression continued. By exploiting natural resources from former colonial countries, a similar system is maintained: the former colonies are made dependent on processed materials from Western countries. Economic colonization is still ongoing in many sectors. This economic colonialism can be called neo-colonialism.

When leaders such as ‘Jokowi’ Joko Widodo try to end dependence on foreign goods several Northern countries sulk & whine to the WTO. The IMF has also criticized Indonesia. But how was this IMF decision taken? Through voting of the executive board. However the size of these votes on the IMF's executive board depends on the size of the shares of its members, which means that rich countries that pay a lot have much greater voting power. So it's not surprising that countries such as the United States, Germany, Japan, France, United Kingdom have dominant voices within the IMF. Meanwhile, countries like Indonesia can still be pressured by international institutions that favor the economic interests of Western countries.

In this case, the Indonesian government must also be aware that oppression within the country will risk being used by neo-colonial bodies such as the WTO and IMF to continue their stance. Domestic injustice will continue to be talked about and used by parties who have pro-Western interests, to undermine Indonesia, and to look for loopholes in order to take advantage of the country.