By Fergus Jensen and Yayat Supriatna
JAKARTA May 24 Indonesia plans financial
incentives to help firms build smelters to comply with new
mining regulations, a government official said on Thursday.
Southeast Asia's largest economy on May 6 declared a halt to
the export of some unprocessed metals unless companies submitted
plans to build smelters, shaking an industry that contributes
around 12 percent to the GDP.
The move is part of the government's drive to protect its
resources and increase state revenue, but Indonesia has been
criticised for creating uncertainty in the mining sector.
"We will propose incentives to support the processing
industry," the head of fiscal policy Bambang Brodjonegoro told a
news conference. He gave no further details.
Indonesia will also review mineral base export prices every
three months to calculate duties on ores subject to new export
regulations, the director general of foreign trade said in
remarks which help clarify how the new duties will operate.
Director general Deddy Saleh said it would be an interim
measure before a longer term system for calculating base prices
for mineral ores is found.
The issue of how best to develop the G20 country through its
mineral resources has become politicised ahead of elections in
2014, when President Susilo Bambang Yudhoyono must step down
after two terms.
Some politicians have been pressing for Indonesia to take a
greater share of revenue from the sector.
The trade ministry on Wednesday effectively exempted two
miners from the regulation, granting permission to PT Aneka
Tambang (Antam) and PT Sebuku Lateritic Iron Ores to
export unprocessed ore.
Standard & Poor's last month held its rating one notch below
investment grade, citing policy slippage in a reference to the
new mining rules, after two ratings agencies recently awarded
Indonesia investment-grade status.
Indonesia is the world's leading exporter of thermal coal,
but the export duties will not apply to that mineral. Similar
duties have been imposed on palm oil as for mineral ores.
The duty will also apply to silver, lead, zinc, chromium,
platinum, bauxite, iron ore and manganese.
The government wants to push miners to process raw ores
domestically and export higher-value finished metals, ahead of a
ban on 14 raw metal exports in 2014 announced earlier this
A separate list of 65 minerals including 21 metals will be
subject to a 20 percent export tax, the government announced
Many small miners of ores such as nickel and bauxite have
been given mining permits by local authorities under Indonesia's
decentralised government system. The new rules may lead some of
them to halt exports rather than pay the tax or submit smelter
Much of this ore is shipped to China, often under the radar
of central government officials.