Indonesian Government Gets Mixed Reviews Ahead of Export Tax Plan

By webadmin on 07:56 pm May 03, 2012
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Dion Bisara & Francezka Nangoy

Dion Bisara & Francezka Nangoy

Indonesia’s plan to impose export taxes on unprocessed minerals as soon as this weekend has left at least one local miner prepared, one already compliant and another one silent.

Terry Pilch, the operations director of Nusa Halmahera Minerals, a gold and copper mining subsidiary of Australia-based Newcrest Mining, said on Wednesday that the government’s move would not affect the company’s operations in Indonesia. Pilch said Nusa Halmahera had already agreed to set up a smelter with a local company, Logam Mulia, which is a subsidiary of state-controlled Aneka Tambang.

“They have assured us that they have the capacity,” he said.

The government plans to announce export duties ranging from 20 percent to 50 percent on 14 unprocessed minerals as part of the country’s efforts to add revenue to state coffers and limit mining-related environmental damage. The affected metals include copper, gold, silver, tin, lead, chromium, platinum, bauxite, iron ore and sand, nickel, molybdenum, manganese and antimony.

Under the 2009 mining law, miners will be banned from exporting raw ores starting in 2014.

Abrun Abubakar, a director at state-controlled tin producer Timah, said the planned export tax would also not affect Timah’s operation.

“The export tax is only being imposed on tin with low concentration. Timah has been producing premium products with a 99.9 percent concentration, so the tax will not be imposed on us,” he said.

Ramdani Sirait, a spokesman for Freeport Indonesia, declined to comment on the impact of the new export tax policy on the company’s operations.

“Freeport Indonesia has followed all its tax obligations, according to the law and our contract with the Indonesian government,” he said. “That includes paying income tax at a higher rate — 35 percent, compared to the usual 25 percent.”

According to data from the Central Statistics Agency (BPS), Indonesia’s export of metal ores – excluding copper – declined 33 percent to $1.32 billion in the first quarter from a year earlier. Shipments of copper dropped 29 percent to $825.5 million.

Metal ores accounted for 5.8 percent of Indonesia’s non-oil and gas exports in the last quarter.

Martiono Hadianto, chairman of the Indonesia Mining Association, said he welcomed the plan to impose an export tax on the metals because it would clarify how the government planned to implement the raw ore export ban in 2014.

But he said he hoped the government had considered the tax costs miners have to bear, which eat up more than 30 percent of their revenue.
Feeling Cheated  Some firms complain they’re already paying enough
Mining companies may have to start paying an export tax on unprocessed minerals this weekend. Reuters Photo/Yusuf Ahmad