Government issues IUPKs for Freeport, Amman
Friday, February 10 2017 - 02:56 PM WIB
Minister of Energy and Mineral Resources Ignasius Jonan issued on Friday decrees approving request made late last month by gold and copper giants PT Freeport Indonesia and PT Amman Mineral Nusa Tenggara (formerly PT Newmont Nusa Tenggara) to convert their mining permit status from contract of work (COW) to special mining business license (IUPK) as part of conditions set under a recently introduced new government regulation to allow them to continue export of copper concentrates.
?Today the Ministry of Energy and Mineral Resources has approved the conversion of mining contracts of PT Freeport and PT Amman into IUPKs,? said Director General of Mineral and Coal at the ministry Bambang Gatot Ariyono.
He said that in line with existing regulations, the fiscal terms including tax under the IUPK are based on prevailing regulations, not nailed-down principle as set under the COW regime.
Based on a 2014 government regulation, mining companies are banned from exporting mineral concentrates starting January 12, 2017. But the current government introduced new Government Regulation No 1/2017 last month, allowing them to continue export of mineral concentrates including copper concentrates for another five years under certain conditions including the conversion of their mining permit status from COW to IUPK, commitment to build domestic smelters within five years, and pay export duty.
PT Freeport last month said it agreed to convert the COW into IUPK on certain conditions including applying the nailed down principle for fiscal terms including tax in the new IUPK as it has enjoyed under the COW regime to help guarantee stability of its investment. Under prevailing regulation principle, the tax can change over time depending on the prevailing regulations.
PT Freeport and PT Amman could not be immediately reached for comments. PT Amman President Director told Petromindo.com on Thursday that the company was ready to follow existing government regulations to be able to resume export of copper concentrates.
Bambang said that following the issuance of IUPKs for PT Freeport and PT Amman, they are expected to quickly make request for export recommendation from the ministry in accordance with the requirements set under Ministerial Regulation No 6/2017.
He said that the PT Freeport IUPK is valid until 2021 in accordance with the validity period of the company?s COW, likewise the PT Amman IUPK will expire in 2028. He said that the two companies later can apply for extension of the IUPK for another 2x10 years.
Elsewhere, Bambang said that regarding?s PT Freeport?s request for applying the nailed-down principle for the fiscal terms in the IUPK, there will be further discussions including the possibility for the company to obtain ?incentives.?
He added that regarding the export duty, it will be later decided by the Ministry of Finance.
Editing by Reiner Simanjuntak