16 September 2019 (closed)
USD/IDR (14,080) -20.00 -0.14%
EUR/IDR (15,582) +54.71 +0.35%
Jakarta Composite Index (6,219.44) -115.41 -1.82%
Indonesia's Ministry of Energy and Mineral Resources issued an export recommendation letter for copper and gold miner Newmont Nusa Tenggara (NNT), meaning that the company can resume copper concentrate exports for another six-month period after the previous permit expired on 22 September. Bambang Gatot, Director General for Coal and Minerals at the Energy Ministry, said NNT has met all requirements - including those related to NNT's commitment to establish domestic smelting facilities - in order to obtain the export recommendation letter.
Newmont Nusa Tenggara, subsidiary of the US-based Newmont Mining Corp, is to team up with Freeport Indonesia to establish a USD $2.3 billion smelter in Gresik (East Java) with a total installed capacity to process two million tons of concentrate per year. Based on a memorandum of understanding (MoU) between both miners, NNT is set to contribute USD $3 million for the development of the smelting facilities. NNT will supply about 400,000 tons of concentrate to the smelter.
Gatot said the export tariff for NNT's copper concentrate exports over the next six months will remain at 7.5 percent. Based on Finance Ministry Regulation No. 153/PMK. 011/2014 the export tariff will be cut to 5 percent in case progress with the smelter development has reached between 7.5 and 30 percent (of completion). When smelter construction has been realized for at least 30 percent, then the export tariff will be scrapped altogether. This tax incentive is provided by the government in order to encourage miner's commitment to smelter development.
Based on Indonesia’s (controversial) 2009 New Mining Law, the country's miners have not been allowed to export mineral ore since January 2014. Instead, miners are required to add value (extract the valuable element via smelting) domestically before export is allowed. However, as Indonesia’s smelting capacity was insufficient at the start of 2014 (and still is insufficient), some miners - including Newmont Nusa Tenggara and Freeport Indonesia - were allowed to resume exports of unprocessed minerals provided that they would agree and comply with specific requirements (a full ban on mineral ore exports will come into effect in 2017). One of these requirements was that the miner would establish smelting facilities (alone or by teaming up with another miner) and would provide evidence to the government regarding the progress made with the development of these facilities. If progress is good enough, then Indonesia’s Energy and Mineral Resources Ministry’s Mineral and Coal Directorate General issues a recommendation, needed to obtain a six-month export permit.
Licenses Mineral and Coal Mining
Indonesia's Energy and Mineral Resources also stated that the government's efforts to restructure the mineral and coal mining sector has entered the last stage. Before the year-end, the government is expected to revoke Mining Business Permits (Izin Usaha Pertambangan, abbreviated IUP) of those miners that have not obtained the Clean & Clear certificate (CnC). This CnC certificate indicates that the miner has no outstanding royalty and other tax debts, fulfilled its exploration and environmental commitments, has no property delineation issues and obtained the necessary forestry permits.
Currently, there are 10,364 IUP-holders in Indonesia. However, only 6,404 of them have the CnC certificate.