Rangga Prakoso & Fidel Ali, Jakarta – The government will allow Newmont Nusa Tenggara and Freeport Indonesia to resume exports of concentrates soon after the two companies showed their commitment to build copper smelters in Indonesia.
Indonesia imposed a gradual tax increase on copper concentrate exports on Jan. 12, but Newmont and Freeport argued the rule conflicts with their contracts of work that protect them from changes in taxes and duties.
The government also required that the two companies – which together account for 97 percent of Indonesia's copper output – commit to build and supply smelter projects in Indonesia before they can resume concentrate shipments.
R. Sukyar, director general of mineral and coal at the Energy and Mineral Resources Ministry, said that the ministry has sent recommendations for the companies to become registered exporters to the Trade Ministry, which has the power to issue the export license.
"Today we submitted a recommendation letter to the Trade Ministry for Newmont to be registered as an exporter," Sukhyar told reporters on Friday. He adding that the ministry had submitted its recommendation for Freeport on Tuesday.
Sukhyar said that his ministry has verified Freeport and Newmont's intentions in building smelters locally.
Freeport, which operates the Grasberg copper and gold mine in Papua, proposed a public-private partnership to build a copper smelter to the government early this month. It is also conducting a feasibility study with state owned gold miner Aneka Tambang in plan to build a smelter.
Freeport owns a 25 percent interest in PT Smelting, which is currently the only copper smelter in operation in the country.
Newmont, on the other hand, has been working with an undisclosed third party to build a smelter and it said it is committed to supply concentrates to Indosmelt, Nusantara Smelting and Indovasi Mineral Indonesia, which are currently building smelters.
Deputy Finance Minister Bambang S. Brodjonegoro said that the Finance Ministry would like both firms to make a 5 percent deposit of their smelter investment as soon as possible for the ministry to start reviewing their concentrate export tax.
"Their progress [on smelters] must be clear first. This is because the [export tax] policy is in line with their progress," Bambang said in his office on Friday.
The regulation – which is part of new mining rules introduced on Jan. 12 – would increase the concentrate export tax from 25 percent now to 60 percent by 2016, and eventually leading to a complete ban of concentrate exports in 2017.