Government to issue more mining regulations

The government is expected to issue more regulations on the mining sector in order to generate greater value from the country?s mining resources, according to R. Sukhyar, Director General of Mineral and Coal at the Ministry of Energy and Mineral Resources as reported by The Jakarta Globe on Wednesday.

Sukhyar said the government plans to impose domestic market obligations on all refined minerals in an effort to develop the local industry.

?However, we must have a industrial road map first, so that we can determine the domestic market obligation,? he was quoted by the paper as saying.

A domestic market obligation refers to the quantity of coal and mineral resources that must be sold in the local market.

After five years of little progress, the 2009 Mining Law, which aims to add value to the nation?s mineral resources, had finally made headway with the miners yielding to demands by the government to commit to in-country processing and refining.

Sukhyar, citing the Energy and Mineral Resources Ministry?s data, said the policy may see investment of more than US$8 billion in refining facilities in Indonesia.

According to the ministry?s projection, Indonesia would have the capacity to refine 18.7 million metric tons of nickel ore into ferronickel, nickel-matte, nickel pig iron or other products by 2018 ? more than double the current capacity.

The capacity to refine bauxite into smelter-grade alumina or chemical-grade alumina may reach 20 million tons by 2018, compared to a meager 1.1 million tons now.

Sukhyar said the high availability of metals domestically should be followed up with the development of manufacturing industries.

The director general cited the properties of smelter-grade alumina, which can be refined into aluminum and ultimately into aluminum alloy.

Aluminum alloy, a mixture of aluminum and rare earth elements, is often used for engineering purposes.

?This situation prompts us to continue reviewing the potential value of our mineral resources,? Sukhyar said.

The director general added that the government may also take another look at its value-added tax regulation affecting the mining sector.

He said he had received complaints from companies about having to pay taxes on minerals while still undergoing the value-added process.

?Those companies want to be exempt from the value-added tax,? Sukhyar said.

He added that he had reported those complaints to the Finance Ministry, which is in charge of the matter. (*)