* Export tax could be eliminated for firms building smelters
* The move is a potential victory for Freeport, Newmont
* Minister: Freeport to resume copper exports in near future
By Wilda Asmarini and Yayat Supriatna
JAKARTA, Feb 24 Indonesia will ease a
controversial tax on mineral concentrate exports for firms that
build smelters in the country, in the first rollback of new
rules that have caused its mining industry to grind to a halt.
The move is a potential victory for U.S. mining giants
Freeport-McMoRan Copper & Gold and Newmont Mining Corp
. A senior government official said Freeport would resume
exports of copper concentrate in the "near future".
Around $500 million a month in ore and concentrate exports
have stopped since President Susilo Bambang Yudhoyono in January
imposed mining rules, which included the progressive tax and a
mineral ore export ban, to force companies to build smelters and
process raw materials in Indonesia.
"The export tax can be changed. For those who have seriously
committed to building smelters, we will ease it," said Sukhyar,
director general of coal and minerals for the mines ministry.
"The export tax can be lowered or maybe eliminated to zero
By contrast, Indonesian government officials have said over
the last few weeks that Jakarta would not back down from the
export tax or any of the mining regulations passed last month.
Before the ban, Indonesia was the world's biggest exporter
of nickel ore. It is also a major supplier of refined tin,
thermal coal and copper.
Freeport and Newmont have refused to pay the progressive
export tax, which rises from 25 percent this year to up to 60
percent by the second half of 2016, saying it breaches their
High-level executives from the two companies, which together
produce virtually all of Indonesia's copper, have been involved
in talks with the government for weeks over the tax and the
building of smelters.
The first major breakthrough seemed to have been reached on
Monday in a meeting between Freeport Indonesia Chief Executive
Rozik Sutjipto and Industry Minister M.S. Hidayat in Jakarta.
Hidayat said Freeport was seeking permission to resume
concentrate exports while it works to build a smelter within
"Freeport, in principle, understands the regulation and will
obey it," Hidayat told reporters after the meeting.
"Freeport will also export concentrate in the near future."
Freeport declined to comment on the expected resumption of
its exports. Hidayat did not mention Newmont in his comments.
Freeport's Sutjipto confirmed to reporters on Monday that
the company would build a copper smelter in Indonesia.
Industry experts said the government's turnaround was to be
expected since the intention of the new regulations was not to
halt concentrate exports.
"I wouldn't say this has come to a surprise to us. What has
come to a surprise is that it took so long to get here," said
Gayle Berry, base metals analyst at Barclays.
Freeport and Newmont have until March 7 to sign agreements
detailing the volume of copper concentrate they will supply to
companies that are building smelters in Indonesia - PT
Indosmelt, PT Nusantara Smelting and PT Aneka Tambang (Antam)
Earlier this month, Freeport and Antam agreed to study the
possibility of building a $2.2 billion, 300,000 tonne smelter to
Sutjipto said the feasibility study on the smelter with
Antam will be completed in April.