MINERBA to issue guideline on smelter guarantee funds

The Directorate General of Coal and Mineral (MINERBA) at the Ministry of Energy and Mineral Resources (MEMR) plans to issue a new ruling detailing the procedure and mechanism for miners to deposit the required domestic smelter guarantee funds, Investor Daily reported on Friday.

Director General of Coal and Mineral R. Sukhyar said that the government has decided that miners planning to build domestic smelters are required to deposit 5 percent of the total investment requirement with the government?s account to prove their seriousness.

He said that the deposit forms part of the requirements for the miners to be able to obtain export recommendation letter from the MEMR.

Sukhyar did not provide details on the mechanism, but said that deposit would not only be paid by the miners planning to build the smelters, but also by miners providing the raw materials. He cited as an example on PT Freeport Indonesia?s planned copper cathode smelter. As PT Newmont Nusa Tenggara does not plan to build its own smelter, but send the copper concentrates to be processed at Freeport?s planned smelter, the company would also have to party shoulder the deposit burden. Freeport will put a US$100 million deposit, while Newmont $25 million.

Following the introduction of the mineral ore export ban policy on January 12, the government has introduced tighter requirements for export of mineral concentrates including punitive export tax, smelter guarantee fund deposit, and verification of progress of smelter construction. (*)