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Indonesia's mining ministry may soften mineral export ban [UPDATED]
January 08, 2014 - 08:35 GMT
(updated with section on Market View)
Indonesia's mining ministry is proposing a regulation that may soften the mineral exports ban due to take effect on January 12, a senior government official told Metal Bulletin.
Indonesia's mining ministry is proposing a regulation that may
soften the mineral exports ban due to take effect on January
12, a senior government official told Metal Bulletin.
Exports of completely unprocessed ores would still be banned,
"however the regulation will define limits on processing and
quota limits", R Sukhyar, director general of coal and minerals
at the ministry, said on Wednesday January 8.
The export ban seeks to stop shipments of raw, unprocessed
commodities to encourage domestic value addition, but there has
been little clarity on what exactly constitutes "processing"
for different types of commodities.
The proposed regulation will define minimum processing
requirements for each mineral, potentially easing the way for
miners to export some intermediate products and
And the government is discussing the possibility for companies
which process and smelt minerals to continue to export after
January 12 if they have come up with plans for processing and
They could be given export quotas related to smelting or
refining capacity, or future downstreaming plans by
But any export of processed minerals will be limited to the
next three years, he added.
"No concentrate will be allowed after 2017, only refined metals
and alloy allowed," he said.
The proposed amendment from the mining ministry would need the
approval of President Susilo Bambang Yudhoyono.
"We are waiting for government regulation prior to end of this
week," Sukhyar said.
Indonesia sees processed minerals increasing its foreign
revenue from metals to $18 billion in 2016 and $25 billion in
2017, from $11.8 billion last year.
However, in the short-term the foreign revenue from metals will
fall, he added.
"The government is trying to find a compromise in which the
industry is given a three to four year period to build smelters
but in the meantime you can still export with restricted
volumes and conditions," an Indonesian miner source who did not
wish to be named, said.
"The argument now is that it's an export control and not a
total export ban," he said.
Companies will have to submit detailed downstreaming plans,
milestones and feasibility studies to the government after
which it will probably give a quota to export, he added.
"One thing is clear, they won't let you export as much as last
year," he said. Whether the new regulation will include higher
taxes, is unknown as yet, he added.
"Earlier on they had tried to impose a quota system and this
year, with the mining law coming into effect, they are going to
reinstate the quota system," he added.
The proposal, if approved, would allow mining companies such as
Freeport-McMoRan Copper & Gold and Newmont Mining Corp to
continue to export ship copper concentrates for three
"We continue to work cooperatively with the government to
clarify the situation to ensure that both the company and the
government will honor their commitments to all stakeholders and
we can continue to operate at full capacity," a spokesperson at
Freeport said in an email to Metal Bulletin on Tuesday January 7.
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