Industry seeks for extension of 2017 smelter deadline

The Indonesian Smelter and Processing Association (ISPA) called on the government to allow eight mineral concentrates producers to continue export after 2017 as they would not be able to complete their smelter projects by the deadline.

ISPA Head R. Sukhyar was quoted by Bisnis Indonesia as saying Monday that the current commodity downturn has affected the miners? finances in developing the required smelters. He added that if they?re not allowed to continue export after 2017, it would completely halt their existing smelter projects.

According to a 2014 government regulation, eight mineral concentrates producers including PT Freeport Indonesia, PT Newmont Nusa Tenggara, PT Sebuku Iron Lateritics Ores, PT Lumbung Mineral Sentosa, PT Smelting, PT Sumber Baja Prima, PT Kapuas Prima Coal, and PT Megatop Inti Selaras have been allowed to continue export mineral concentrates until 2017, by which time the required smelters are expected to have already been built.

PT Freeport, a subsidiary of US-based Freeport McMoRan Copper & Gold, for instance, is planning to develop a US$2.3 billion copper smelter in Gresik, East Java, possibly teaming up with Newmont Nusa Tenggara. But recent reports said that the progress of the project has only reached 30 percent.

Minister of Energy and Mineral Resources Sudirman Said indicated last month that no all of the smelter projects may be able to meet the 2017 deadline due to the current commodity downturn, triggering speculation that the government would relax the mineral export ban policy introduced in early 2014. The government banned the export of mineral ores in early 2014, pushing miners to build domestic smelters in a bid to generate greater value from the country?s mining commodities. However, certain concentrates producers are still allowed to continue export until 2017.

Sukhyar denied suggestion that the request for extension of the 2017 deadline would solely benefit PT Freeport, saying that other concentrate producers such as PT Lumbung would also benefit from such policy.

Lumbung Mineral Sentosa Director Ricky Gowdjali acknowledged it, pointing out that if the company can?t continue export in 2017, its current zinc and lead smelters in Bogor, West Java, whose progress has now reached 60 percent would be halted. (*)