Government seeks ?other option? to allow export of mineral concentrates
Wednesday, February 8 2017 - 02:55 AM WIB
Petromindo|Lucky
The government is seeking for other temporary policy option to allow mineral mining companies such as gold and copper giant PT Freeport Indonesia to immediately resume export of mineral concentrates which have been suspended since January 12.
Vice Minister of Energy and Mineral Resources Arcandra Tahar said on Tuesday that the government doesn?t want the recently introduced new mining regulations to kill the industry that would cause unemployment and devastating impact to the economy.
?We?re trying, trust us. We don?t want to see the (mining) industry die (because) there will be thousands of people lose their jobs. The impacts are plenty.? Arcandra said.
The previous government introduced new regulations in 2014 banning the export of mineral ores in a bid to push miners to build domestic smelters to allow the country obtain greater value from its mineral resources as mandated by the 2009 Mining Law. Mineral concentrates, however, were allowed to continue export until January 11, 2017 in the hope that the miners such as PT Freeport, which produced copper concentrates, would have already completed the required domestic smelter by that time.
However, as many miners including PT Freeport failed to complete their domestic smelter projects, the current government on January 12 introduced new regulations allowing miners to continue export of mineral concentrates for another five years under certain conditions including requiring them to convert their mining permit status from mining contract of work (COW) to special mining business license (or IUPK) and commitment to complete domestic smelters within five years.
While PT Freeport has agreed to convert its COW into IUPK, the company insisted on a nailed down tax system, which the company has enjoyed under the COW, as part of an investment stability guarantee. PT Freeport has warned that further delay in obtaining export permit would force the company to cut down production at its gold and copper mine in Papua. The company?s parent, US-based Freeport McMoRan Inc has also warned it is ?considering alternatives? to enforce its contractual rights unless the company is given permit to continue export of copper concentrates.
Arcandra, however, has said that an IUPK follows prevailing regulation system, not nailed down, which means that the tax can change depending on the regulations.
Arcandra acknowledged on Tuesday that of the 11 requirements that must be met by PT Freeport to resume export of copper concentrates, the tax issue which must be based on prevailing regulations once the company convert into IUPK has been one of the difficult points of negotiation between the company and the government.
He said that while the stipulations set under the recently introduced Government Regulation No 1/2017 and the implementing ministerial regulations are final, the government will try to find other option to allow resumption of export of mineral concentrates during this ?transition period.? He said that the Ministry of Energy and Mineral Resources will discuss with the Ministry of Finance to seek ways to resolve the taxation issue. ?But the government regulation and the ministerial regulations are already final,? he said.
?We?ll find the best middle way,? he said. ?In art of negotiation, you cannot take 100 percent on the table. You have to give up some of your rights.?
Editing by Reiner Simanjuntak