JAKARTA Feb 7 Miners with smelter plans in
Indonesia will have to pay a financial guarantee to prove they
are serious about building domestic metal-processing plants,
said mining ministry officials.
The move indicates the Southeast Asian nation may be
unwilling to significantly roll back or make major concessions
in its mining policy that have ground ore and concentrate
exports to a complete halt.
President Susilo Bambang Yudhoyono last month imposed new
mining rules, including a controversial mineral ore export ban
and progressive export taxes on concentrates, aimed at forcing
miners to build smelters and process their raw materials in
The policies have forced U.S. miners Freeport-McMoRan Copper
& Gold and Newmont Mining Corp to halt all
exports, as both firms say the export tax breaches their mining
contracts and it is not economically viable to make such large
smelter investments in Indonesia.
High level executives from both companies have been involved
in talks with the government over the tax and building of
smelters, and a breakthrough now looks a distant prospect.
"That's our plan," said Susilo Siswoutomo, deputy energy and
mineral resources minister, when asked whether companies
building smelters had to pay a financial deposit.
The size of the deposit was yet to be decided and would be
contained in a regulation to be issued soon, Siswoutomo said,
adding that paying the deposit would not exempt miners from the
escalating export tax.
Under the Jan. 12 regulation, concentrate exports are
allowed to continue for some minerals, with different purity
rules attached, but they will be subject to an export tax
ranging from 20-25 percent and rising to 60 percent by the
second half of 2016.
Ore and concentrate exports from Indonesia, which is the
world's biggest exporter of nickel ore, thermal coal and refined
tin, have now ground to a complete halt.
Companies will have to pay 5 percent of the total smelter
construction cost as a guarantee, which will be held in local
banks for up to three years, a Jakarta Post report quoted
Sukhyar, director general of coal mines and minerals at the
energy and mines ministry, as saying.
PT Indosmelt plans to build a $1.5 billion 700,000-tonnes
capacity copper smelter by 2018, and has reached "conditional
sale and purchase agreements" to receive concentrate supplies
from both Freeport and Newmont.
The smelting firm this week urged the Indonesian government
to provide tax holidays and other financial incentives to
convince companies to invest hundreds of millions of dollars to
build copper smelters.
Freeport is conducting a feasibility study into the
construction of an Indonesian copper smelter, which was due to
be completed last month, but it has yet to release its findings.