Bureaucratic hitch delays Freeport's Indonesian export permit
(Minews) - Indonesia is considering a cut in the level of tax it plans to levy on exports of metal concentrates, Metal Bulletin understands.
The country’s ministry of finance could announce in the next few days a final decision on export tax levels, after hearing calls from the industry for more lenient rates, a senior government official said.
An announcement could allow copper producers Freeport McMoRan and Newmont Mining to export for the first time since a ban was put in place on January 12.
“The ministry of energy and mineral resources and the ministry of finance have been intensively discussing about the amount of export tax to be charged to companies who wish to export mineral concentrates,” a senior government official from Indonesia’s ministry of energy and mineral resources who did not want to be named told Metal Bulletin on Tuesday, April 29.
PT Freeport Indonesia and PT Newmont Nusa Tengarra haven’t exported copper concentrates since the export ban came into effect on January 12 and the progressive tax on concentrates of 25% now, rising to 35% at the beginning of next year and reaching 60% by the second half of 2016 was introduced.
The government official added that he hoped it would be lowered from the current 25% to 5-10% and that everyone was now waiting for the ministry of finance’s decision.
The local Indonesian media have reported that the companies have asked to pay no more than 5% export tax while the mining ministry has advised a tax of no more than 10%.
Five companies including the Indonesian units owned by miners Freeport McMoRan Copper and Gold and Newmont Mining have applied for “a letter of recommendation to export mineral concentrate abroad,” the official said.
“However, these companies must meet several requirements, such as having the approval of the development plan smelter and must show the progress towards building smelters by 2017, putting 5% seriousness guarantee of the total investment of the smelter establishment to a recommended state-owned bank, as well as pay the export fee issued by the Ministry of Finance,” he added.
Once the mining company has decided to build a smelter and has the government approval, then 5% of total investment value has to be put aside as guarantee in a bank by the company, he explained
adding that the list of banks who will be able to hold these guarantees will be made available in a few days.
“Freeport is planning on building a smelter with several alternative partner and Newmont is now looking for a company who has a plan to build a smelter,” he said.
State-owned miner PT Antam has held several informal discussions with Freeport and Newmont about building a copper smelter in Indonesia.
“Freeport and Newmont will be able to export copper concentrate after they meet all the requirements,” he said adding that the ministry of energy and mineral resources had received the applications for mineral export recommendation letter by PTFI and PTNNT and were evaluation and processing them.
If PT-FI is unable to resume exports in May 2014, there will be a deferral of about 50 million lb of copper and 80,000 oz of gold per month, Freeport has said.
Newmont said it was unable to export about 2,000 oz of gold and 2,500 tonnes of copper as a result of the new export regulations and that it may implement contingency plans to scale back production at Batu Hijau in Indonesia. This was keeping in mind the company’s copper concentrate storage capacity and in-country smelter availability, which would impact the company’s ability to achieve its outlook.
