By Randy Fabi and Wilda Asmarini
JAKARTA, March 3 Indonesia's mines ministry
could recommend as early as this week that Freeport-McMoRan
Copper & Gold receives a reprieve from a controversial
tax that has halted copper exports for more than two months, a
government official told Reuters.
Freeport and fellow U.S. miner Newmont Mining Corp
have refused to pay an export tax on mineral concentrates
imposed in January, which rises from 25 percent this year to up
to 60 percent by the second half of 2016, saying it breaches
To win the tax reprieve, Freeport must pay the government a
5 percent security bond for the construction of a smelter and
finalise supply agreements with smelter-building companies, said
Sukhyar, director general of coal and minerals for the mines
"After (meeting those conditions) ... I will ask the
ministry of finance to reduce, discount or even eliminate the
export tax," he said after a book-launching event in Jakarta at
Freeport declined to comment.
The finance ministry said it was willing to review the
escalating export tax case by case for companies that have
smelter projects under way. Adjustments would be made based on
how advanced the projects are, deputy finance minister Anny
"They must clarify their commitments ... These will be
reviewed by the Fiscal Policy Agency," Ratnawati said.
The export tax was introduced as part of a series of new
mining rules, which include a mineral ore export ban, to force
companies to build smelters and process raw materials in
Disputes and confusion over the new rules have halted about
$500 million worth of monthly mineral ore and concentrate
Executives from Freeport and Newmont, which together produce
virtually all of Indonesia's copper, have been in talks with the
government for weeks over the tax and the building of smelters.
A breakthrough appeared to have been reached last week, when
Indonesia signalled it was ready to ease the export tax on firms
that proved they were serious about building smelters in the
country, the first rollback of its new rules.
Freeport, which warned last week that it may need to declare
force majeure on copper concentrate sales if the dispute drags
on, has submitted a request to the mines ministry for a permit
to resume concentrate exports.
"For that kind of approval, we need proof from Freeport that
they are serious on building a smelter. They don't have to build
it alone, but can cooperate with others," Sukhyar said.
The mines ministry has given Freeport and Newmont until
Friday to sign agreements detailing the volume of copper
concentrate they will supply to companies building smelters in
Indonesia - PT Indosmelt, PT Nusantara Smelting and PT Aneka
Once these are signed and the security bond given, the mines
ministry will submit its recommendation to the finance ministry,
which has the final decision on the export tax, Sukhyar said.