INDONESIA MINING: Indonesia expects to issue export licences by March

Indonesia expects to start approving export licences by next month, and has received applications from six companies for recommendation letters.

Indonesia expects to start approving export licences by next month, and has received applications from six companies for recommendation letters.

The applications were reported to Metal Bulletin by a senior government official, speaking on the sidelines of the 3rd Annual Indonesia Mining conference in Bali on Monday February 17.

“Until Friday six companies have applied to us for a recommendation letter,” said Hersonyo Prio Wibowo, deputy director for mineral production supervision from the ministry of energy and mineral resources.

Companies must have a recommendation letter from the mining ministry in order to be registered and get export licences from the trade ministry, he added.

Once the companies have applied “to export, then the amount or volumes allowed to export will be decided”, he said.

The six companies are mostly contract-of-work holders, Wibowo said. Vale Indonesia, Nusa Halmahera Minerals, and PT Karimun Granit have applied for recommendation letters, he added.

All mining exports have come to a standstill since the ore export ban on January 12, and the issues surrounding the new progressive export policy and processing requirements.

Indonesia has introduced a new progressive export tax which will result in copper miners such as Freeport McMoRan Copper and Gold and Newmont Mining facing a tax on concentrates of 25% now, rising to 60% by the second half of 2016.

The major mining copper miners in Indonesia — Freeport and Newmont — have not been able to file for export licences as their downstream plans are not feasible, Wibowo said.

Companies applying for licences to export concentrates until 2016 have to submit a plan that outlines the steps they are taking to build downstream processing.

As of now, there is only one copper smelter in Indonesia, Gresik, which receives its copper concentrate feed from Freeport’s Grasberg project and Newmont’s Batu Hijau project.

“They have only submitted a feasibility study [for copper plants] and so it is not yet feasible to build smelters,” Wibowo said.

Last month Freeport told the government that a feasibility study did not make a copper smelting plant viable, he said.

“Now they are trying to collaborate with PT Antam to process copper,” he said.

Local media reports have said that the two companies are looking to collaborate on a 300,000-tpy copper smelter for $2.2 billion.

An industry participant told Metal Bulletin on the sidelines of the conference that the government cannot give recommendations to companies who are being taxed under the progressive export policy, as the tax is makes any export plans unviable and loss-making for the company.

He said that along with all the other documents that need to be filed with the mining ministry and trade ministry, a company has to file its financial statements and profit outlook.

“[The mining ministry] cannot issue a recommendation [to the trade ministry] on a company that is making a loss on exporting due to the 20% export tax,” he said.

“The 20% tax is unviable, no one can export concentrates with that tax,” he said.

Shivani Singh
Twitter: @ShivaniSingh_MB

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