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REPORT: Indonesia Lifts Export Ban for Two Miners

In the wake of Indonesias six-month ban on metal ore concentrates, the country has resumed exports for two miners after they agreed to pay a new 20 perc...

Admin
|Jul 22|magazine5 min read

In the wake of Indonesia’s six-month ban on metal ore concentrates, the country has resumed exports for two miners after they agreed to pay a new 20 percent tax.

The two companies -- Sebuku Iron Lateritic Ores (SILO) and Lumbung Mineral Sentosa – gained permits from Indonesia to export iron ore, lead and zinc concentrates. It’s the first shipments of its kind since the country changed its export rules in January.

SILO is expected to export eight million tons of iron ore a year, while Lumbung should ship 29,000 tons a year. Both companies will be shipping to China.

The export tax, which was implemented to support domestic processing, aims to force mining companies to build smelters and processing facilities in Southeast Asia’s largest economy. At 20 percent this year, the tax rate skyrockets to 60 percent in the second half of 2016 for all metals but copper, which is 25 percent.

The big questions remains: when will US-based miners Newmont and Freeport McMoRan Copper & Gold agree to the tax? The two companies, which argue the new tax violates existing mining contracts, have veered in different courses. Freeport has already reached a preliminary agreement with the government while Newmont has filed for international arbitration earlier this month.

The ban on exports forced Newmont to declare force majeure on copper sales from Indonesia earlier this year, putting roughly 80 percent of its Batu Hijau mine employees on leave at reduced pay.

Disputes and confusion over the new mining rule have halted closely $500 million of monthly mineral ore and concentrate exports.