Government loosens mineral processing policy

In what is seen as loosening its tough mineral processing policy, the government has backed down from an initial plan to require mineral miners to deposit a huge guarantee funds for the construction of domestic smelters, Kontan daily reported on Wednesday.

The government initially planned to include the deposit requirement policy in the revision of the Government Regulation No 1/2014. But Director General of Coal and Mineral R. Sukhyar was quoted by the paper as saying that there is no need to include the deposit obligation in the government regulation. He said that a circular from his office would be sufficient.

The government initially planned to require miners planning to build domestic smelters to put down deposit (about 5 percent of the investment required for the construction of the smelters) as proof of their seriousness. The seriousness in building domestic smelters forms part of the requirements to be able to obtain the necessary export recommendation from the Ministry of Energy and Mineral Resources (MEMR). Miners have protested the deposit requirement as it would greatly affect their cash flow considering the huge funding requirement.

Dede I. Suhendra, a director at the Directorate General of Coal and Mineral, said that the loosening of the deposit requirement was made considering that miners have already shouldered a lot of burdens including the punitive export tax.

He hoped that the Ministry of Finance would ease the export tax rates, taking into account the funds that would have to be put aside by miners in developing domestic smelters. (*)