President will allow concentrates exports

January 11, 2017, 10.14 AM  | Reporter: Agus Triyono, Andy Dwijayanto, Febrina Ratna Iskana
President will allow concentrates exports


JAKARTA. The government will release Government Regulation and Minister of Energy and Mineral Resources (ESDM) Regulation, which allow exports of copper concentrates.

Information has it that President Joko Widodo has agreed on the two legal products. Subsequently, the regulations will be processed by Ministry of Law and Human Rights. “Those will be settled in this week,” said Minister of ESDM Ignasius Jonan during a press conference at his office, Tuesday (10/1) night.

Jonan said, the government regulation and Minister of ESDM regulation will stipulate the change of status of contract of work to Special Mining Permit (IUPK), as well as the obligation for divestment. Those regulations will also stipulate the extension of concentrates exports along with the obligation for constructing smelter, imposition export tax, and processing low grade ore.

Government has considered some factors before allowing the extension of copper concentrates exports, including employment opportunities in mining sector, as well as increasing government revenues.

Jonan also said that the license for copper exports does not necessarily remove the domestic downstream mining business and mining divestment. Those two factors remain the obligations for the miners.

“We are still complying with Law on Mineral and Coal. There is no rules violation,” Jonan stated. Jonan also claimed that the regulations were not made to satisfy certain mining companies, such as PT Freeport Indonesia and PT Newmont Nusa Tenggara. “The government regulation and ministerial regulation were not made only for special business entities, but for all sectors,” he said.

However, the government’s policy has sparked criticisms. Vice Chairman of the Association of Indonesia’s Processing and Refining Industries Jonatan Handojo said that crude mineral exports violate Law on Mineral and Coal.

He reminded that the regulations may have political impacts to the recent government. He also hopes that government will sustain law enforcement. In this case, the government does not need to worry about loosing non-taxation state revenues as much as US$ 700 million per year from Freeport. “Freeport can file a lawsuit to arbitration court if the exports are terminated. But the government does not need to worry,” he stressed.

Executive Director of Indonesia Mining Association (IMA) Syahrir AB also assessed that the license for mineral exports will be unfavorable, as mineral mining companies have commitment to build smelter. Syahrir added, it is better to provide incentives for smelter and low cost energies, as well as relaxing the licensing process.

(Muhammad Farid/Translator)

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