GOVERNMENT PLANS TO IMPOSE PROGRESSIVE ROYALTY ON MINING

by Andi Abdussalam

Jakarta, Dec 7 (Antara) - The government is planning to impose a progressive increase rate on royalties of gold, copper, and silver mining commodities, in its efforts to increase state revenues from the mining sector.          The royalty progressive increase rate, which is set at 0.25 percent, is regulated in the draft revision of Government Regulation No. 9 Year of 2012 (PP 9/2012) on the Type and Tariff of Non-Tax State Revenues.          The plan for progressive increase in the royalty rate is in the hands of the Ministry of Finance and the Coordinating Ministry for Economic Affairs to decide. The Ministry of Energy and Mineral Resources (ESDM) has submitted the draft revision of the government regulation to the two ministries, namely the Coordinating Ministry of Economic Affairs and Finance Ministry.          "Now, the draft revision of the law is in the hands of the Finance Ministry and the Coordinating Ministry of Economic Affairs," Bambang Susigit, the director for mineral exploitation affairs of the SDM, was quoted as saying by kontan.co.id news portal on Monday (Dec 4.).          Actually, the government has not yet made public its plan to increase progressively the royalties in the production of gold, silver, and copper, but, it has been revealed to all stakeholders. Therefore, the ESDM leaves the decision on whether the government will go ahead and impose the policy to the Coordinating Ministry and the Finance Ministry.

GOVERNMENT THREATENS TO REVOKE PERMITS OF MINING COMPANIES

By Andi Abdussalam

Jakarta, Jan 14 (Antara) - Mining companies have, so far, benefited from exploiting and exporting Indonesia's mineral ores without processing it at home, thereby causing losses to the nation.          Hence, in 2009, the government had taken a decision to ban the export of raw minerals and made it mandatory for mining companies to build smelters. It decided to ban the export of unprocessed mineral ores as of January 2014 in a bid to encourage miners to process ore domestically.          However, after protest from the industry, the implementation of the ban was pushed back to January 11, 2017, to give an opportunity to mining companies to build smelters.          The government has currently issued an ultimatum to miners who have yet to build smelters. Energy and Mineral Resources (ESDM) Minister Ignasius Jonan affirmed that he will revoke the concentrate export permits of companies that delayed the construction of their smelters.          "They have to build smelters if they want to export concentrates. They have to at least promise to build the smelters in five years, with a stamped statement, or else I will revoke their permits," Jonan stated at the ESDM ministry building in Jakarta on Thursday (January 12).

GOVT LIKELY TO STOP EXPORTS OF UNPROCESSED NICKEL ORES

By Andi Abdussalam

Jakarta, Oct 13 (Antara) - The government is unlikely to resume its export relaxation policy for unprocessed bauxite and nickel ores after revising regulations governing mineral and coal mining activities.          "This has not yet been decided, but it is almost certain that we will not give export relaxation for nickel and bauxite ores. I want a further study," acting Minister of Energy and Mineral Resources Luhut Binsar Pandjaitan said in Jakarta on Wednesday.          Based on Law No. 4 of 2009 on Mining, the government banned the export of unprocessed mineral ores as of January 2004. However, the implementation of the ban was pushed back to January 11, 2017, to give a chance to mining companies to build smelters at home.          The export relaxation on mineral ores was contained in Government Regulation (PP) No. 1 of 2014. Now the government is drafting a revision of PP No. 1 of 2014. Many parties have expressed concern about the government's intention of resuming its export relaxation for all mineral ores.          Mines Advocate Network (Jatam) argued that export relaxation of mineral ores will deplete the country's mineral ore reserves in various regions. "Export relaxation of mineral ores will cause the state and people to lose a chance to get added value from the development of smelters," Jatam Coordinator Merah Johansyah Ismail said on Wednesday.

GOVERNMENT URGED TO MAINTAIN BAN ON MINERAL ORE EXPORT

by Andi Abdussalam

Jakarta, Feb 23 (Antara) - A legislator and businesses engaged in the development of smelters have urged the government to maintain its ban on mineral ore export, so that the country's raw minerals will have added value.          "It is a setback if the government reopens the opportunity for the export of raw minerals," Dito Ganinduto, a member of Commission VII on energy affairs of the House of Representatives (DPR), stated on Sunday.          Dito said that based on Law No. 4 of 2009 on Mineral and Coal Mining, the ban on the export of raw minerals was a program being carried out to ensure the development of downstream mineral industries in a bid to increase the added value of resources, which will ultimately boost the nation's economy.          Companies that are serious about developing smelters have also called on the government and the DPR to consistently maintain the export ban while revising Law No. 4 of 2009 on Mineral and Coal Mining.

MINISTRY ASKS FOR PROGRESSIVE MINERAL ORE EXPORT DUTY CUTS

By Andi Abdussalam

Jakarta, May 10 (Antara) - The ministry of industry is proposing that progressive cuts in taxes on mineral ore exports be put in place based upon the ongoing development of mining companies' smelters.          The ministry of industry, in a statement on Friday, said it had proposed that the greater the progress a mining firm had made in developing its smelters, the smaller the duties it should pay for its semi-finished mineral exports.          At the same time, the company would be allowed to export larger volumes of mineral ores based on the progress of its smelter's development.          If a company has developed 35 percent of its smelters or it has completed feasibility studies and groundbreaking for smelters, a company could receive an export duty cut of 20 percent, with concentrate exports limited to 30 percent of its production capacity.          If the construction of the smelter has reached 85 percent, or has entered the commissioning phase, the tax export the company will pay for its mineral exports will be lowered to 15 percent, and the limit of its export volumes can be raised to 50 percent of its production capacity.          Further, a mining company can receive a reduction of up to 10 percent on its mineral export tax and export volumes of up to 60 percent if the development of its smelters has been 90 percent completed.          Based on the proposal, the mining company will pay a zero rate on its exports, if the development of its smelter has been completed and it will no longer be allowed to export semi-finished minerals, because the company is able able to purify its raw minerals with its own smelter.

CONTRACTS OF ALL MINING FIRMS TO BE AMENDED

By Andi Abdussalam
Jakarta, March 8 (Antara) - The government has set a target to finish amending all contracts of mining companies before October this year, as part of its efforts to comply with Law No. 4/2009 which bans mineral ore exports.          Law No.4/2009 bans raw mineral exports as of January 12, 2014, resulting in companies in the mining business  --both mineral mining and coal mining and which export raw minerals-- must amend their contracts due to the law.         "All companies holding mineral mining permits (KK) and coal-contract of work licenses (PKP2B) should have signed contract amendment agreements before the end of President Susilo Bambang Yudhoyono's administration term in October," Minister of Energy and Mineral Resources Jero Wacik stated on Friday.          Jero Wacik said all 112 holders of KK and PKP2B permits  are expected to sign contract amendment agreements before October as part of the efforts to implement the law.          Under the law, mining companies are required to process minerals inside the country before exporting them.  "Based on the law, we are no longer allowed to export (raw minerals) as of January 12, 2014. We should consistently abide by it," Coordinating Minister for Economic Affairs Hatta Rajasa noted recently.          According to a director for technical and environment affairs at the Ministry of Energy and Mineral Resources, the government has given mining firms five years to develop factories or smelters to process or refine ore. Yet many mining firms had not begun operating smelters within that period.

INDONESIA TO BAN MINERAL ORE EXPORTS

By Andi Abdussalam

Jakarta, Nov 28 (Antara) - Indonesia plans to ban exports of raw minerals early next year and develop smelters of its own to increase the production of higher-value products from its minerals and metals industry.          But metal and mining companies have warned the government of potential losses if it bans mineral ore exports while the development of smelters at home is still ongoing.         "In principle, it will be difficult to stop exporting minerals as of January 2014 as the smelters under construction will not be operational until next year," Executive Director of the Indonesian Mining Association (IMA) Syahrir Abubakar said at the 13th ASEAN Senior Official Meeting (ASSOM) in Bali on Tuesday.          He noted that the government should be cautious about issuing a ban on mineral ore exports next year because it could lose billions of US dollars in state revenues. The ban will severely affect several regions across the country, he added.          According to IMA data, the government could lose nearly 45 percent of state revenues arising from taxes and royalties paid by two foreign mining companies, Freeport and Newmont.          Under Law No. 4 /2009 on Mineral and Coal Development, mining companies are required to process minerals in the country before exporting them. The law, which comes into effect next year, bans the export of raw minerals from January.          Producers, therefore, have to either build their own smelters or process the minerals at smelters owned by other companies.

PEOPLE WANT FOREIGN FIRMS TO REDUCE DOMINATION OF MINING RESOURCES

By Andi Abdussalam

Jakarta, June 10 (ANTARA) - Alarmed by the increasing rate at which foreign companies are gaining  control over Indonesia's national resources, some quarters have urged the government to take  bold and concrete steps to safeguard the country's natural resources by terminating contracts  containing unfair terms or nationalizing ventures set up based on agreements deemed unfair to Indonesia.          In the face of the many mining contracts now to expire, the government has to take anticipatory steps to renegotiate the  contracts or nationalize the ventures concerned to prevent the country's natural resources from falling further into the clutches of foreign companies.          Senior economist of the Advisory Group on Economic Industry and Trade (Econit) Hendri Saparini said foreign firms were trying to control the Indonesian economy and redirect national economic policies to serve their own interest.          "In order to make it easier for foreigners to take control over Indonesia's natural wealth, they bribe politicians and government officials to produce regulations in favor of their interest," Hendri Saparini told a discussion on "My Country Under the Shackles of Corruptors," last week.          Hendri said companies often gave bribes to officials in order to obtain mining licenses. "This is saddening because the licenses they get by way of bribing are later sold to other businesses for  a higher price," she said.          She said many laws were pro-foreigners and disadvantaged the Indonesian people in the long run. He cited as an example Law No. 30 / 2007 on the mining sector. This law among others had a stipulation which enabled foreign firms to gain control of  95 percent  of the mining sector.          The senior Econit  economist said the clause in the law should be revised because it would harm the interest of the Indonesian people in the long run.          In addition to the revision of the law, the government also needs to adopt he principle that it would only sign contracts whose clauses were fair to the nation.  Mining licenses should also be evaluated.   Therefore, she said, the government should evaluate the implementation of the mining licenses, whose number reached 6,000, to check their designations.          After all, in the gas and oil sector for example, many contracts would expire in 2018. In this case, Marwan Batubara of Indonesia Resource Studies (Iress) has reminded the government of the need to take strategic and beneficial steps to the state before the expiry of oil and gas block contracts with foreign companies.          "There will be tens of oil and gas contracts which will expire up to 2018. The government should immediately take strategic steps which are beneficial to the state before the oil and gas block contracts end," Marwan said.          National oil companies (NOC) should be given the first priority to cultivate the state resources so that they would greatly benefit the people.          If Article 33 of the 1945 Constitution is to be observed, Pertamina as a state company whose shares are 100 percent owned by the state, must be given the first priority to cultivate oil and gas blocks whose contracts have expired.           Marwan said with the constitutional message, even without request, the government should assign Pertamina to cultivate the oil and gas blocks. "But in practice, Pertamina rarely got the assignment. It even often became the victim such as in the case of Cepu and Semai V blocks," he said.         Marwan said the matter was urgent to be done by the government to anticipate the extension of a number of oil block contracts such as the Mahakam oil field and the South Natuna block and others.         In line with the calls of various quarters, the government is considering renegotiating investment contracts with foreign companies engaged in oil, gas and coal mining that have not been in conformity with the law on mineral and coal mining.          In principle, the government respected the contracts but deemed it necessary to review unfair contracts, Finance Minister Agus Martowardoyo said at the State Palace last week.          "In 2011 there are many contracts of work and so forth that we need to review to see whether or not they represent win-win solution and whether or not they are unfair. That's what we want to review and study," he said.           But he stopped short of naming the foreign mining companies.  "All of them. We cannot mention them. But they are mostly engaged in natural resources management," he said.          The director general of mineral and coal mining of the ministry of energy and mineral resources, Thamrin Sihite, said meanwhile contracts made with investors would be honored.          "Like in a marriage if divorce is to be done it must be based on an agreement. So it will not be done just like that," he said.  He said a number of mining contracts have been agreed to be adjusted with the law. He however declined to name the contracts. "As soon as deal is made we immediately sign it," he said.          However, some called for nationalization of companies in the mining business. "It would be more appropriate for the government to nationalize the mining business licenses," chairman of the Indonesian Green Institute Chalid Muhammad said in a discussion on renegotiation of natural resources contracts early this week.          Chalid said that now was no longer an appropriate time to discuss renegotiation of the contracts because they were no longer contextual. If the contracts were renegotiated they would be just the same, as they would eventually be diverted from foreign firms to national firms where foreigners also owned shares.          He said that some of the shares of national firms turned out to be also controlled by foreign holders. Therefore, Chalid who is a former director of the Indonesian Environmental Forum (Walhi), said that the fund obtained from contract renegotiation would neither be effective as it would not flow to the people.          He reminded that a number of state leaders had done nationalization at present such as Evo Morales (Bolivia), Lula da Silva (Brazil), and Hugo Chavez (Venezuela).          "They are not fined with penalties and are not taken to the international arbitration," he said.***5*** (T.A014/A/HAJM/13:55/f001) (T.A014/A/A014/F001) 10-06-2011 14:31:3