JAKARTA (TheInsiderStories) - The Indonesia’s Finance Ministry has raised minerals export duty from 0 to 5 percent to 0 to 7.5 percent followed the presidential decree (PP) No. 1 of 2017 on the Fourth Amendment to Government Regulation No. 23 of 2010 on the Implementation of Business Activities of Mineral and Coal Mining.
Finance Minister Sri Mulyani Indrawati has signed the Finance Minister Regulation (PMK) No. 13/PMK.010/2017 as an amendment PMK No. 140/PMK.010/ 2016 regarding the determination of export goods subject to export duties and tariffs out.
In a press statement received by The Insider Stories, the new rule has goal to accelerate the implementation of the increase in value-added minerals through processing and refining of minerals in which management must provide significant added value shall be used for the welfare of the community.
The export duty on processed mineral products will be set at 0-7.5 percent, depending on the progress of the construction of smelter plant. The more advanced the construction of a company’s smelter plant, the lower export duty will be, and vice versa.
The policy aims to encourage miners to accelerate the development of the construction of smelter plant. The government also set export duty of flat 10% for metal mineral products, for nickel with Ni element of less than 1.7 percent and bauxite that has been refined with similar element or larger than 42% AlO3.
Previously, Minister for Energy and Mineral Resources Ignasius Jonan has announced the new policy on minerals business in the country. The key points contained in the new regulation is amended terms of the contract of work (CoW), mining permit (IUP) and special mining permit (IUPK) for foreign company must gradually divers 51 percent of shares during 10 years of production or should abide by the Mining Law to Indonesia government, state-owned enterprises, regional enterprises or private company.
Furthermore, the government relax the negotiation of extension contract from two years to five years prior to the expiry of the contract, sets the benchmark of minerals price, require to amend the license of CoW holders to IUPK, allowed to export concentrate if CoW became IUPK with the condition must make statements to build the smelter in 5 years time and divest 51 percent of shares
The new regulation has goal to improve the creation of state revenues, create new jobs, supporting the regional economy, keeping the investment climate remains conducive and the ownership of government, SOEs or private sector should be 51 percent in accordance with Article 33 of the Law.
His ministry has published two Regulation of the Minister of Energy (Permen) ESDM No. 5 in 2017 on Mineral Added Value through Mineral Processing and Purification Activities in State and No. 6 in 2017 on Procedures and Requirements for the Implementation of Sales Referral Abroad Mineral Processing and purification Results.
Permen ESDM No. 5/2017 regulates :
• Holders of Mining Business License Production Operations (IUP OP), Business License of Special Mining Production Operations (IUPK OP), the Mining Business License Production Operations (IUP OP) special processing and / or purification are required to process and purification of mining production corresponding minimum limit of processing and / or purification.
• Implementation of the results of the mining processing and refining can be done alone or in collaboration.
• Nickel low levels below 1.7% and bauxite low levels below 42% shall be absorbed by refining facilities a minimum of 30% of the input capacity of the smelter.
• If the domestic demand of low grade and low grade bauxite have been met and there are still available that has not been absorbed, the rest of nickel ore and low grade bauxite can be sold abroad.
• Holders KK Metals can only sell abroad purified to meet the minimum after purification.
• In order to encourage the implementation of the downstream, the Government provides an opportunity holders of KK Metals, Mining Business License Production Operations (IUP OP), Business License of Special Mining Production Operations (IUPK OP), the Mining Business License Production Operations (IUP OP) special processing and / or purification, and other parties to concentrate sales abroad for the next 5 years from the issuance of this candy, with the proviso, as follows:
– Change into IUPK KK Production Operations
– A commitment smelter construction
– Paying a maximum of 10% export duty corresponding physical progress and financial realization smelter development. (The above-mentioned requirements contained in Permen No. 6/2017)
• Sales abroad can only be done after getting a recommendation export approval from the Director General on behalf of the Minister.
Ministerial Decree (Permen) No. 6/2017
• Before getting export approval, holders of Production Operation IUPK Metals, Metals Production Operation IUP and Production Operation IUP Special for processing and/or refining shall obtain a recommendation.
• The procedure for getting a recommendation: Holders of Production Operation IUPK Metals, Metals Production Operation IUP and Production Operation IUP Special for processing and / or refining apply recommendations to the Minister of Energy and Mineral Resources c.q. Director General of Mineral and Coal
• Recommended the implementation of mineral sales abroad is a requirement to obtain export approval.
• Application Recommendation referred to in paragraph (1) by the holders of Production Operation IUPK Metals, Metal Mineral Production Operation IUP and Production Operation IUP specifically for processing and / or purification should include requirements, among others:
a. The integrity pact to undertake the construction of purification facilities in the country as listed in Annex II, which is an integral part of the Regulation of the Minister of Energy and Mineral Resources No. 6/2017;
b. A copy of the certificate of Clear and Clean (CnC) to holders of Production Operation IUP Metals;
c. Report of Analysis (RoA) or Certificate of Analysis (CoA) Metals Mineral products that have met the minimum limit Processing issued 1 (one) month from the independent surveyor appointed by the Minister;
d. The certificate of settlement of payment obligations Non-Tax Revenues for 1 (one) year issued by the Directorate General of Mineral and Coal;
e. Refining facilities development plans in the country that has been verified by an independent verifier, among other purification facilities construction schedule, the value of investments, and the input capacity per year;
f. The work plan and budget for the current year have been approved by the Minister or the Governor in accordance with its authority;
g. Verification reports on the physical progress of the independent verifier for holders of Production Operation IUPK Metals, Metal Mineral Production Operation IUP and Production Operation IUP specifically for processing and / or purification which have or are implementing development purification facilities;
h. Overseas sales plan that includes, among others, the type and amount of Metals that have met the minimum limit Processing/nickel content of <1.7%, bauxite has been done washing (washed bauxite) with Al2O3 content of> 42%, the number Heading/HS (Harmonized System), port of loading, unloading port, and destination countries.
• Export recommendations given to determine:
a. The type and quality of the products according to the minimum limit of processing
b. A certain amount that can be exported by:
• Estimation of reserves or guarantee the supply of raw materials to meet the needs of refining facilities;
• The number of foreign sales in the approval of the work plan and budget of the current year;
• Input capacity purification facilities; and
• Physical development of purification facilities.
• Approval and denial of export recommendations issued no later than 14 working days.
Link of regulatory support:
http://www.esdm.go.id/assets/admin/file/pub/PP_NO_1_TAHUN_2017.pdf
http://esdm.go.id/assets/admin/file/pub/PERMEN_05_TAHUN_2017.pdf
http://esdm.go.id/assets/admin/file/pub/PERMEN_NOMOR_06_TAHUN_2017.pdf
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