Freeport lobbies RI over punitive export tax

US giant Freeport McMoRan Gold and Copper Inc is lobbying the Indonesian government over the punitive export tax imposed on copper concentrates.

Visiting CEO of Freeport McMoRan, Richard Adkerson met on Wednesday with Indonesian Minister of Industry MS Hidayat, and Minister of Finance Chatib Basri to express the company?s objection toward the export tax policy, reports said on Thursday. He was accompanied by Rozik B. Sutjipto, President Director of Freeport?s Indonesian unit PT Freeport Indonesia, which operates a giant gold and copper mine in Papua.

Adkerson reiterated that the export tax policy as well as the mineral export ban were in conflict with its mining contract of work.

The government implemented a long-planned export on mineral ores on January 12 of this year as mandated by the 2009 Mining Law, encouraging miners to build domestic smelters to generate greater value added from the mining commodities. However, the government gave six mineral concentrates including copper a grace period allowing the commodities to be sold overseas until 2017. But the mineral concentrates are subject to punitive progressive export tax of 20-25 percent starting this year, and to rise to 60 percent in 2016, prompting protest from the miners.

The Indonesian Chamber of Commerce and Industry (Kadin) has proposed for the export tax to be lowered to a fix rate of 5 percent until 2016, to allow miners to still enjoy healthy profit. Kadin?s Didie Suwondho said that with the industry?s profit margin of 5-10 percent, a 20 percent export tax would be financially disastrous for the miners.

He added that the miners must be able to enjoy healthy profit to allow them to invest in smelters. (*)