Indonesia Evaluating Mining Rules as 2017 Deadline on Metal Exports Nears
Jakarta. Indonesia's mining ministry is scrambling to find a way around a deadline on mineral processing that could prevent some miners, including US copper mining giant Freeport-McMoRan, from exporting minerals from the country from 2017.
Under a government regulation introduced in 2014, miners of copper, zinc, lead, manganese and iron are restricted to exporting partially processed minerals until January 2017, after which only shipments of refined metals will be allowed.
The export curbs - which have cost Indonesia billions of dollars in lost revenue - were intended to shift sales from unprocessed raw materials to higher-value finished metals, but smelters have been slow to materialize as low commodity prices have made them economically unviable.
The government is now "comprehensively evaluating [the requirements] for each commodity," coal and minerals director general Bambang Gatot said on Thursday (08/09), referring to meetings on the rule with acting mining minister Luhut Pandjaitan.
Uncertainty over Indonesia's mining rules have been a flash point between miners and the government for years. The sector accounted for almost 6 percent of Indonesia's GDP before the 2014 ban on metal ore exports, and has since slipped to about 4 percent.
Also of concern to Jakarta, the government's non-tax revenue from mining missed its target by 43 percent last year.
"There will definitely be a solution ... at least by January," Gatot said, noting that the government was discussing whether it needed to change the law or revise a regulation.
Earlier this week, acting mining minister Pandjaitan said the government had been too slow in implementing domestic processing requirements mandated in Indonesia's existing 2009 mining law.
"The implementing regulation only came in 2014, so there's no way they could build smelters [in time], and what's more commodity prices were down," Pandjaitan said.
"Now we are trapped with how to continue applying the mining law properly. We can't change the law just like that," he said.
The 2017 deadline would not apply to nickel ore or bauxite, exports of which have been completely banned since 2014.
The rules on those ores were also "still being discussed," Pandjaitan said.
The government has been rolling out new measures to re-energize Southeast Asia's largest economy after growth cooled to its slowest in 6 years in 2015, partly as a result of weaker returns from commodities.
The government is also seeking new revenue sources, with a fiscal deficit expected to widen to Rp 219 trillion ($17 billion) this year.
Freeport, Indonesia's largest copper miner and an important source of government revenue, has said it is confident the government will not push ahead with the 2017 deadline, as the move could harm Southeast Asia's biggest economy.
Reuters
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