Govt to slap export tax on 14 mineral commodities

The Jakarta Post | May 02, 2012 | Rangga D. Fadillah,

Energy and Mineral Resources Minister Jero Wacik on Tuesday announced 14 mineral commodities that will become subject to export tax, varying between 20 and 50 percent, if sold in the form of ore.

The official policy on the tax will be announced on May 6 and followed by the issuance of a new regulation to legally implement the policy, he said.

The 14 commodities are copper, gold, silver, tin, lead, chromium, molybdenum, platinum, bauxite, iron ore, iron sand, nickel, manganese and antimony.

Coordinating Economic Minister Hatta Rajasa also revealed the implementation of the export tax was not intended to increase the country’s revenues, but was rather meant to be a disincentive so that mining companies did not sell their commodities in the form of ore.

“We want miners to process and refine the ore in the country and therefore stimulate the construction of more smelters here,” he told reporters after a coordination meeting at the Energy and Mineral Resources Ministry in Jakarta.

The 2009 law on Minerals and Coal stipulates that in 2014 all mining companies in Indonesia will be prohibited from exporting raw materials. To prevent overexploitation of the country’s natural resources and excessive environmental hazards before 2014, the government plans to apply the export tax.

“We want to control the exploitation of our natural resources, we don’t want companies to exploit them excessively,” Hatta explained. The Energy and Mineral Resources Ministry also issued a ministerial regulation in February saying that all mining permit (IUP) holders must stop exporting raw materials by May 7, three months after the regulation is enacted.

 However, after a wave of protests from mining companies, the government said companies could still export metal ore if they fulfilled three requirements.

The requirements are that their licenses must be clean and clear, they have to sign integrity pacts agreeing that in 2014 they must stop exporting metal ore (as mandated by the 2009 law) and lastly, they must submit a comprehensive proposal on whether they want to build their own smelters, make consortium with other companies to jointly build smelters, or sell their raw materials to smelting companies in
the country.

The executive director of the Indonesian Mining Association (IMA), Syahrir Abubakar, said the export tax regulation would create legal uncertainty and confusion among mining companies because the ministerial regulation banned raw material exports in May, but the export tax implied that exports were still allowed.

“If we’re prohibited from exporting raw materials in May, why should the government apply export tax,” he said.

“If the government wants to implement the export tax, it has to revoke the ministerial regulation first so the legal basis is clear,” he continued.

Komaidi Notonegoro, a mining expert from the ReforMiner Institute, argued the export tax might be good to limit exports and exploitation, but that the government had to ensure that the domestic market had to be able to absorb raw materials while waiting for more smelters to be constructed in the country.

Source: http://www.thejakartapost.com/news/2012/05/02/govt-slap-export-tax-14-mineral-commodities.html