The Jakarta Post reported that, Mining companies represented by the Indonesian Mining Association (IMA) welcomed the government’s plan to impose export duty on 14 mineral commodities starting May 6, seeing the initiative as a step in the right direction in replacing the initial plan to entirely ban the exporting of commodities.

In a statement issued on Wednesday, the IMA said the ministerial decree on the export ban, which was introduced in February and was set to become effective on May 7, had created much controversy due to the speed of its planned implementation; far earlier than the 2014 deadline set by the 2009 Mining Law, which would have left most mining companies unable to comply.

The government had argued that the quick implementation of the export ban was aimed at avoiding over-exploitation by miners ahead of the 2014 deadline, and to ensure that supplies were secured to meet growing domestic demand.

“The IMA appreciates the government’s [new] plan to issue and implement export taxes on 14 mineral commodities … We hope that given the intention to make Ministerial Decree No. 7/2012 effective on May 6, there will be further clarification from the government on its implementation,” IMA chairman, Martiono Hadianto, said.

Previously, after a wave of protests from mining companies, the government said they could continue exporting as long as certain conditions were met; namely, mining companies had to sign integrity pacts agreeing that in 2014 they would stop exporting metal ore, and they would have to submit a comprehensive proposal on whether they wanted to build smelters -- individually or in joint ventures -- or sell their products domestically.

The government revealed that as many as 17 companies had proposed to build smelters in Indonesia, in addition to the 19 companies that had previously submitted similar plans to the Energy and Mineral Resources Ministry. Altogether, Indonesia will have a total of 36 new smelters built over the next few years.

The IMA has requested that the changes to the export ban regulation be adapted into a new regulation so as to provide legal certainty for all mining companies’ operations.

A mining expert from the Institute for Essential Services Reform, Fabby Tumiwa, agreed that the government needed to provide a legal framework.

“The 2009 Law on Minerals and Coal sets the deadline at 2014, but the ministerial regulation stipulates it’s this month. Now we hear about the government’s plan to apply export tax on metal ore. What can be taxed if raw-material exports have been fully banned?” he said.

He suggested the government revoke the regulation or revise it with a clearer, new regulation to accommodate the export duty.

Ahead of the implementation of the export tax, the IMA also warned the government to consider the fact that mining companies were already paying on average 30 percent taxation on their income.

“We hope the implementation of the export tax will not adversely affect the investment climate in Indonesia and lead to less foreign investment,” Martiono said.

According to Energy and Mineral Resources Minister Jero Wacik, the export taxes, which will be announced by the Finance
Ministry on May 6, will range between 20 and 50 percent of a commodity’s sale value.

State mining firm PT Aneka Tambang’s (Antam) president director, Alwinsyah Lubis, acknowledged that the planned duty would be a challenge for mining companies. But, he understood the government’s goal to prevent over-exploitation of natural resources while awaiting the raw materials export ban to be fully implemented in 2014.

“Business-wise, it will indeed add a greater burden to companies, but I think it is still bearable,” he said in a recent exclusive interview with The Jakarta Post.
Source: The Jakarta Post