Govt to Impose 20% Tax Rate on Exempted Miners

By webadmin on 04:49 pm May 04, 2012
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Indonesia will impose an average tax rate of 20 percent on exports of 14 unprocessed ores by mining companies that are exempted from an export ban that begins on Sunday, Jero Wacik, head of the Energy and Mineral Resources Ministry, told reporters in Jakarta on Thursday.

The government also will ban mining companies from exporting unprocessed ore starting on Sunday, Jero said

Earlier on Thursday, Edi Prasodjo, a director of coal at the Energy Ministry, had said at a conference that “miners will still be allowed to export after meeting some requirements, including obtaining permits.”

The largest nickel-ore and bauxite supplier to China announced the prohibition in February, two years ahead of schedule. The new rules apply to holders of mining business licenses issued after 2009. The affected metals include copper, gold, silver, tin, lead, chromium, platinum, bauxite, iron ore and sand, nickel, molybdenum, manganese and antimony.

Companies with a so-called contract of work, including Phoenix-based Freeport-McMoRan Copper & Gold and Newmont Mining, will be allowed to ship ores until 2014.

The government will order miners exempted from the ban to sign a letter of commitment that they will stop all ore shipments by 2014, Thamrin Sihite, director general of minerals and coal at the energy ministry, said last month.

The exporters must also obtain an export permit from the Trade Ministry, said Deddy Saleh, director general of foreign trade at the ministry.

Indonesia may choose to gradually tighten supplies by using taxation instead of continuing with the ban, Demian Reed, general manager commercial for bauxite and alumina at Rio Tinto Alcan, said on April 25.

The government has no plans to apply a coal-export tax so far because it hasn’t formally discussed such a tax with all stakeholders, Prasodjo said on Thursday.

“The government wants to focus more on how to control coal production,” he said without elaborating.

The Indonesia Mining Association estimated in March that the ban will cut nickel-ore and bauxite exports by as much as 75 percent this year.

Indonesia shipped 33 million metric tons of nickel ore and 40 million tons of bauxite last year, according to Syahrir Abubakar, the group’s executive director.

The curbs, aimed at lifting the value of shipments and boosting local smelting capacity, apply to exports of raw metals including iron ore, gold, and silver, and bring them in line with the rules that have applied to tin since 2002, with only refined exports permitted. Indonesia is the world’s biggest shipper of tin, used in packaging and as solder.

Freeport operates the Grasberg mine in Papua Province, and Newmont operates the Batu Hijau copper mine on Sumbawa Island. Grasberg contains the world’s largest recoverable copper reserves, according to Freeport.