Mining giants propose $125m in surety bonds

JAKARTA. Giant miners PT Freeport Indonesia and PT Newmont Nusa Tenggara are proposing to put down a combined US$125 million as a guarantee, or surety bonds, of their commitment to processing their minerals domestically.

Energy and Mineral Resources Ministry director for mineral Dede Suhendra said Freeport had proposed to pay $100 million for the guarantee and Newmont $25 million.

The surety bonds policy is part of the government’s strategy to ensure that miners process their minerals into end products at domestic smelters by 2017 in return for export permits for their semi-finished minerals.

The government implemented a ban on the export of unprocessed ores on Jan. 12, but still allows for the export of semi-finished products, such as concentrates, until 2017, with an export tax.

“We will evaluate their proposals to determine the proper amount [of the surety bonds]. We will also ask for experts’ assessment because we cannot let the amount be too low,” Dede said on Wednesday.

The surety bonds, set to be up to 5 percent of the total cost of a smelter’s construction, will be placed at national banks.

Miners will have their money returned when the construction of their smelters are complete.