Indonesia's U-turn on mineral ore policy in danger of backfiring

Jakarta

WHEN Ignatius Jonan, Indonesia's energy and mineral resources minister defended his government's decision to relax the country's insistence on processing its own mineral ore he appeared to be answering not only why it was attempting a "temporary" U-turn on a resources policy it inherited from the last government, but also why it may have to do it again before long.

"We shouldn't have a market that is controlled by smelter capture," Mr Jonan said to foreign journalists in Jakarta last week.

"If we keep closing the door (on exports) smelter capacity won't expand as we expect."

Trouble is, that is what appears to be happening. Low commodity prices, the relatively high price of electricity and government flip-flop…