Government to revise two mining regulations
Friday, December 2 2016 - 02:10 AM WIB
Arcandra said on Thursday that the government will revise Government Regulation No 1/2014 as it seeks to ease the current mineral export ban policy, as many miners have yet to complete construction of the required domestic smelters.
He said that the revision is expected to be completed before January 12, 2017.
The regulation stipulates that mineral concentrates can no longer be exported starting January 12. This means that only refined mineral products can be shipped overseas. But as miners such as the giant copper and gold company PT Freeport Indonesia has yet to complete the construction of domestic smelter, the government has said it would ease the mineral export ban policy, allowing the miners to continue export of mineral concentrates for another 3-5years in the hope that by which time the miners can complete the required smelters. The export will be subject to export tax. PT Freeport plans to build a copper smelter in Gresik, East Java, but has yet to start construction. It remains unclear whether the export on mineral ores will also be relaxed. Mineral ores have been banned from export since early 2014.
Arcandra said that the government also plans to revise Government Regulation No 77/2014. The regulation among others stipulate that mining firms controlled by foreign investors are required to gradually divest stake to local investors after five years of production. PT Freeport, for instance, plans to divest 10.64 percent shares but has yet to reach agreement on the price of the shares with the government. Government officials have previously said that the government is considering to allow the mining firms to implement the mandatory divestment program via initial public offering, a policy welcomes by PT Freeport.
The revision of the Government Regulation No 77/2014 is also expected to help mining firms such as PT Freeport which plans to make huge investment in smelter project and underground mine operation in Papua Province. The problem, however, is that PT Freeport?s contract is set to expire in 2021. The company has said it wants to make early extension of the current contract before proceeding with the planned investment. The current regulation, however, states that PT Freeport can only apply for contract extension two years prior to its expiry, or in 2019. The government is seeking to allow mining firms apply for contract extension five years before the expiry of their contracts by revising the Government Regulation No 77/2014. (*)