The Energy and Mineral Resources Ministry has finally agreed to issue recommendation letters to US-based PT Freeport Indonesia and PT Newmont Nusa Tenggara, enabling the two companies to resume selling their copper concentrates overseas, following the issuance of the ore-export ban earlier this year.

The ministry'€™s director general for minerals and coal, R. Sukhyar, said on Friday that his office had issued the recommendation letters to Freeport and Newmont after the two companies had shown a serious commitment to comply with legislation concerning the mandatory processing of copper concentrate in local smelters.

'€œThe recommendation letter for Freeport Indonesia was issued three days ago, while Newmont'€™s recommendation letter will be sent today [Friday],'€ Sukhyar said.

The government'€™s ban on exporting mineral ore was introduced on Jan. 12 to comply with the 2009 Mining Law, which requires mining companies to process their ore into metal end products in local smelters before selling them overseas. The move aims to boost the country'€™s revenue from the mining sector.

As not all miners are able to comply with the ban due to a lack of smelting facilities, the government later decided to allow the export of semifinished products, such as copper concentrate, through the end of 2016, albeit with escalating export duty of 25 percent in the first year rising to 60 percent by the second half of 2016.

However, in order to obtain an export permit, miners have to get a recommendation letter from the ministry indicating that they are seriously committed to processing their ore either in their own smelters or in one belonging to a third party.

Freeport and Newmont have agreed to supply their concentrates to companies planning to build smelters, such as PT Indosmelt, PT Nusantara Smelting and PT Aneka Tambang.

Newmont'€™s president director, Martiono Hadianto, said he hoped the copper miner would obtain the export permit next month, along with a reduction in export duty to enable the company to resume its exports.

'€œApril is a critical time for our mining operations. If we are not allowed to resume exports next month, we will have no choice but to implement our contingency plan, including a scaling down of our mining operations, which could lead to layoffs,'€ he said during a meeting with The Jakarta Post on Friday. He said the firm'€™s existing concentrate production was sufficient to supply PT Smelting Gresik for an entire year.

Newmont, which produces about 500,000 tons of copper concentrate a year, ships 25 percent of its total production to Smelting Gresik, the only copper smelter in the country, and the remainder to overseas buyers. Freeport also processes about 40 percent of its total 2.5 million tons annual concentrate production at the East Java-based smelter.

Meanwhile, the Trade Ministry'€™s director general for foreign trade, Bachrul Chairi, said his office had so far approved the applications of 15 semifinished mineral producers, giving them the status of registered exporters. After obtaining the status, he went on, the miners needed to acquire recommendation letters from the Energy and Mineral Resources Ministry to enable them to obtain export quotas.

Freeport Indonesia president director Rozik Soetjipto confirmed that the company had received the recommendation letter to obtain an export quota.

'€œWe expecting to resume exporting in April. We are currently producing at a level of 30 to 40 percent [of normal production],'€ Rozik said in a text message.

Sukhyar said his office would hold a meeting with the Finance Ministry next week to discuss a possible reduction in export duties.

Popular

RI, Australia strengthen partnership on taxing crypto assets

Analysis: Indonesia denies normalization with Israel to enter OECD

Citroen to produce electric cars in Indonesia