Indonesia to Levy Export Tax on Mineral Ore in May

Indonesian Energy and Mineral Resources Ministry has revealed that it would issue a regulation on a mineral ore export tax before May 6, a media quoting a senior official reporting here on April 18, 2012.

The ministry's director general for minerals and coal, Thamrin Sihite, said on April 17 that the government was now intensively discussing the export tax, but as of April 18, 2012, there was no agreement made on the rate.

"We still have to coordinate with many institutions such as the House of Representatives, mining companies and the Indonesian Chamber of Commerce and Industry [Kadin]. No number has been agreed upon yet," he was quoted by the Jakarta Post as saying.

The export tax is a supplement for the 2012 ministerial regulation on a raw material export ban issued on Feb. 6. The regulation says all mining companies should stop exporting raw materials three months after the regulation is enacted.

The director explained the companies could still export raw materials after May 6 as long as they fulfilled three requirements: their licenses must be clean and clear (following all legal procedures), they have to sign integrity pacts agreeing that in 2014 they must stop exporting metal ore and lastly, they must submit a comprehensive proposal on whether they want to build their own smelters, make consortiums with other companies to jointly build smelters, or sell their raw materials to smelting companies in the country.

"If mining companies fail to comply with any one of the requirements, we will revoke their export permits," Thamrin said.

He also revealed that as many as 17 companies had proposed to the government building smelters in Indonesia. Previously, 19 companies had also submitted similar plans to the Energy and Mineral Resources Ministry. With that addition, Indonesia will have a total of 36 new smelters over the next several years.

The Indonesian Mining Association (IMA) had earlier urged the government to invite investors to build smelters in the country because persuading mining companies in Indonesia to form consortiums would be difficult considering technical and financial capability constraints.