Indonesia to Impose 20% Export Duty on Metal Ores

Indonesia will impose a 20 percent export duty on all metal ores under new regulations to be applied from May 6 and will work on export policy plans for its coal industry in the next month, senior government officials said on May 4, 2012.

Jakarta aims to boost investment in domestic ore processing to lift exports of higher-value finished metals by the G20 economy through the new rules which come into force on May 6, 2012.

The resource-rich nation will prohibit shipments of raw minerals unless miners submit plans to build smelters and it has received 82 proposals out of 400 mining firms, Energy and Minerals Minister Jero Wacik told a news conference.

The new rules do not apply to companies such as Freeport-McMoRan & Gold Inc, Vale Indonesia and Newmont Corp, which hold decades long Contracts of Work (COW) agreements, but the government wants to renegotiate those contracts, the officials said.

"PT Freeport Indonesia (PTFI) has carried out all the provisions that are included in the COW. Also according to the COW, we have built the first smelting facility in Indonesia, which is PT Smelting, an affiliate of PTFI," said a statement by Freeport emailed to Reuters.

"We marketed left-over concentrate that we produced at fair market value based on long-term contracts with several international smelters, and we will continue to honour those contracts. But, we are willing to sell additional concentrates if it is based on a competitive pricing," Freeport said.