Mining industry demands clarity on export ban

Rangga D. Fadillah | The Jakarta Post, Jakarta | Mon, 04/16/2012

Mining industry stakeholders want the government to immediately clarify a decision to ban metal ore exports to avoid confusion that might hinder growth.

Komaidi Notonegoro, a mining expert from ReforMiner Institute, said that the current regulatory framework allowed for multiple interpretations that did not give companies legal certainty.

“The policy to implement regulations is often different from what is mandated in the law. This is what we see in the case of the ministerial regulation on the export ban,” he told The Jakarta Post over the weekend.

The government, required to ban metal ore exports by 2014 under the 2009 Law on Minerals and Coal Law, planned to introduce the ban in May to promote local processing.

However, the Energy and Mineral Resources Ministry said that companies would only be required to submit proposals on how they would comply with the 2009 law by May, and that the ban would be implemented in the future.

 “I think the government has to issue more detailed regulations containing the rights and obligations of mining companies to comply with the export-ban deadline. It also must be clear whether the regulations only apply to contracts made after the regulation is enacted or to all contracts,” Komaidi said.

“The new regulation must include an explicit deadline for the export ban to be implemented and provide a mechanism as to what companies must do if they have to stop exporting ore while still bound by contracts with buyers,” he continued.

Meanwhile, Syahrir Abubakar, the executive director of the Indonesian Mining Association (IMA), said in a recent interview that mining companies were uncertain if the government would give leeway to continue ore exports if they submitted the compliance proposals, as the regulation explicitly said that the ban deadline was May.

Syahrir said he was afraid for the future prospects of companies with long-term contracts: If the companies could not sell their ore, funders might withdraw their money.

The problem has been exacerbated by the government’s plan to levy a 25 percent export tax on mineral products in 2012 and a 50 percent tax in 2013, a measure that the IMA described as dangerous.

The association said many contract holders paid institutional taxes between 35 and 45 percent, despite the 2008 Income Tax Law that stipulated a maximum rate of 25 percent. An additional export tax might force companies to the verge of collapse, the IMA said.

Komaidi said that the planned tax was well intended and supported the government’s vision to increase the value of Indonesia’s natural resources. However, he added, before implementing the rule, the government had to provide necessary infrastructure for companies to process and refine ore in country.

“The government has to encourage the construction of more smelters in the country. The export tax can’t be implemented until the supporting infrastructure is available,” he said.

http://www.thejakartapost.com/news/2012/04/16/mining-industry-demands-clarity-export-ban.html