Minister proposes export tax on mineral ores, concentrates

Minister of Industry Airlangga Hartarto said that while he maintains position that there should be no relaxation of the mineral export ban policy to promote the development of domestic smelter industry, he said that if the government of President Joko Widodo decides otherwise, an export tax should be applied to help protect the industry.

Bisnis Indonesia quoted Airlangga as saying Monday that the export tax can be applied similar to the ones applied in coca and crude palm oil. He, however, said that the proposed export tax has yet to be discussed with other ministries.

The comments come following reports that the Ministry of Energy and Mineral Resources is planning to relax the mineral export ban policy by drafting a new regulation, to replace the existing Government Regulation No 1/2014, which stipulates that mineral concentrates can no longer be exported starting January 12 of next year. The revision of this regulation comes as miners such as PT Freeport Indonesia and PT Newmont Nusa Tenggara have yet to complete the construction of the required domestic smelters to process the concentrates prior to export.

The Ministry of Energy and Mineral Resources has also proposed to the House of Representatives, which is revising the 2009 Mining Law, to relax the mineral ores export ban to allow miners to get export proceeds to help finance the completion of domestic smelters.

The government introduced the export ban on minerals in early 2014 to help generate greater value added at home from the country?s mining commodities as mandated by the 2009 Mining Law, pushing miners to build domestic smelters. The government, however, at the time decided to allow the export of mineral concentrates until January 12, 2017.

The plan to relax the mineral export ban policy has been widely protested by domestic smelter industries, among others because they fear that allowing the export of mineral ores would create difficulties for them to secure the required raw materials for the smelters.(*)