Minews - INDONES IA MINING: Export tax ‘killing’ industry

(Minews) - The progressive export tax issued by the Indonesian government could see the country’s mining sector collapse in as little as one month, as the division struggles with shutdowns and layoffs, Indonesian Mining Assn vice chairman Tony Wenas warned.

The export tax is “unviable” at 20% for all processed minerals and is “killing” the industry, he told Metal Bulletin on the sidelines of the 3rd Annual Indonesia Mining conference in Bali on Tuesday February 18.

A single-digit export tax, perhaps “close to 1%”, would be more viable, he added.

All mining exports have come to a standstill since the ore export ban on January 12, with market participants mulling the impact of the proposed new progressive export tax regime and processing requirements.

The new export tax will result in copper miners such as Freeport McMoRan Copper and Gold and Newmont Mining facing a tax on concentrates of 25% now, rising to 60% by the second half of 2016.

Wenas warned that the Indonesian mining industry could cave in before the country’s presidential elections in April.

“We have a month or so to see the collapse of communities in some regions,” he said Smaller mining companies have been most affected the by the export ban and tax and have been forced to make “significant” layoffs, he said, although he added that he did not have total
numbers.

Bigger mining companies in Indonesia can “probably survive” for a couple of months, Wenas added, but they will have to stop producing once they have reached the limits for their stockpiles, which they are not allowed to export.