Ministry plans new policy to accelerate smelter projects

The Ministry of Energy and Mineral Resources is currently drafting a new policy, which will govern procedure in implementing sanctions for mineral mining companies failing to make significant progress in their planned domestic smelter projects. The new policy will also require miners to deposit guarantee funds to ensure they realize the smelter projects.

News portal kontan.co.id quoted ministry's Director of Mineral Management and Development Yunus Saefulhak as saying that the new policy, which will be in the form a ministerial decree, is expected to be issued this month.

He said that in accordance with Ministerial Regulation No 25/2018 on coal and mineral mining development, miners failing to make significant progress in every six-month period will be subject to a financial penalty of 20 percent of sales.

But the ministerial regulation does not stipulate the procedure in implementing the financial sanction. He said that the new policy will detail the procedures in implementing the financial sanction. "So, for instance, when will they (the miners) start making the payment? And then after paying (the penalty), will their export permit revived? How will it be revived? These all will be regulated under the new policy." Yunus told the news portal on Monday.

Mineral miners are required to develop domestic smelters as part of conditions to allow them to continue export of mineral concentrates as the government wants the country?s mineral commodities to be refined at home to generate greater value. Their smelter projects will be audited by an independent auditors every six months. The project must show at least 90 percent progress in every six months. Miners failing to deliver significant progress will be subject to sanction including suspension of export permit and financial penalty.

So far, two miners, namely nickel miner PT Surya Saga Utama and bauxite miner PT Lobindo Nusa Persada have seen their export permit suspended as they have failed to make significant progress with their smelter projects following the six-month audit.

Yunus said that the export permit of the two companies have yet to be revived as the ministry is still waiting for reports from the independent auditors whether the miners have already made significant progress in their smelter projects.

But he quickly added that for now the two companies will not be given financial sanction yet. He said that the new planned policy will not be retroactively implemented.

Elsewhere, Yunus said that under the new policy, mineral miners will also be required to deposit guarantee funds to ensure they realize the domestic smelter projects. The funds will be returned once the projects are closed to completion.

Many miners have been facing challenges in developing the smelters including raising the required funds. (*)