(Recasts, adds quotes)
By Wilda Asmarini and Bernadette Christina Munthe
JAKARTA Jan 10 Indonesia will issue new rules
for miners this week, the mining minister said late on Tuesday,
which will cover contracts and permits, exports, taxes,
divestment obligations and domestic processing requirements,
among other issues.
Indonesia announced in 2014 a ban on ore shipments to push
miners to build smelters to process ore locally, but gave some
concessions to concentrate producers after protests from the
industry. As part of this push, a ban on the export of mineral
concentrates from Indonesia is due to kick in on Jan. 12.
Rules now being drafted will allow concentrate shipments to
continue beyond that deadline in certain cases, Energy and
Mineral Resources Minister Ignasius Jonan told reporters after a
The new rules were needed "to clarify agreements on
downstream mineral processing and other related matters," Jonan
said, referring to directions from President Joko Widodo and
rules on domestic processing set out in the 2009 Mining Law.
The rules would have to maximise returns on Indonesia's
natural resources, as mandated in the Constitution, while also
considering increasing state revenues and employment
opportunities, he said.
"The government hopes for the creation of new work areas,"
he said. Foreign mine investors would need to divest 51 percent
of their holdings "wherever possible," he added.
Traders have been closely watching the situation given
Indonesia is a major producer of metals such as copper and
Any relaxation of Indonesia's ban on ore exports could
impact nickel prices and nickel smelter investors, which have
been supported by supply restrictions, including from the
Philippines, which took Indonesia's place as the world's top
nickel ore exporter in 2014.
No mention was made of nickel or bauxite on Tuesday, but
Jonan said the new rules would include obligations on domestic
processing of low-grade ores. Last month Jonan said the
government was considering allowing some nickel ore and bauxite
A change to the existing rules is critical for Phoenix,
Arizona-based Freeport McMoRan, whose Grasberg operation
in Indonesia currently exports around two-thirds of its output
as copper concentrate.
Freeport, along with state-controlled PT Aneka Tambang Tbk
and other major miners, had lobbied President Joko
Widodo's administration to ease the ban to allow more time for
them to build the necessary smelters to process all the ore at
A continuation of concentrate exports would be linked to the
development of smelters, Jonan said on Tuesday, stopping short
of providing details.
In December, the government said Freeport would first need
to switch over from its current contract of work (COW) to a
special mining licence in order to clinch a new export permit.
This would mean Freeport needs first to agree on new fiscal
terms including taxes and royalties among other things, issues
that may take longer to resolve.
Freeport's exports from Indonesia were held up for more than
six months in 2014 in a fractious export tax dispute connected
to the country's mining rules, costing Southeast Asia's top
economy more than $1 billion and putting thousands of jobs at
"Hopefully in 1, 2, 3 days this week this will all be
finished," Jonan said.
(Writing by Fergus Jensen; Editing by Alexandra Hudson)