UPDATE 1-Indonesia to limit exports of processed minerals

Tue Jan 28, 2014 12:58am EST

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* Part of government efforts to force miners to process ores at home

* But policy confusion means miners have halted exports (Adds quotes, details)

By Fergus Jensen and Wilda Asmarini

JAKARTA, Jan 28 (Reuters) - Indonesia will issue export quotas for processed minerals and concentrates soon, a senior mines ministry official said, the latest policy step tied to controversial government efforts to take greater control over shipments of its natural resources.

The government is trying to force miners to process mineral ores in the country, as part of plans to transform Southeast Asia's biggest economy into a producer of finished goods, rather than simply a supplier of raw materials.

But the new policies, which include a ban on unprocessed mineral ore shipments and export taxes on mineral concentrates, have led to widespread confusion, forcing miners to halt exports until there was more clarity.

Hersonyo Wibowo, chief of mineral production supervision at the mines and energy ministry, said the export quotas could be issued within the next few days.

"We have to control mineral exports. We are also worried that once purification facilities (smelters) are ready there may be no (ore) reserves left," Wibowo said at an industry conference.

Indonesia is the world's biggest exporter of nickel ore, refined tin, thermal coal and home to the fifth-largest copper mine and top gold mine.

The policy confusion stems from the implementation of the controversial ore export ban on Jan. 12.

President Susilo Bambang Yudhoyono signed off on the ban, but also passed last-minute amendments that exempted miners such as Freeport McMoRan Copper & Gold and Newmont Mining Corp, while at the same time imposing a surprise progressive tax on exports.

Indonesia's two main copper producers, Freeport and Newmont, have yet to resume exports since the new tax was introduced, while the Mineral Entrepreneurs Association has filed a legal challenge against the ore export ban.

Adding to the regulatory confusion, officials at the mines ministry opposed the finance ministry's imposition of the export tax system, said an industry official, who declined to be named due to the sensitivity of the matter.

Wibowo confirmed that there were talks between the two ministries over the export tax.

"We are in ongoing discussion with the finance ministry and we are seeing two sides," Wibowo said. "We have to look at the aspirations of our friends in the mining industry too." (Writing by Randy Fabi; Editing by Ed Davies)

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