Friday, July 25, 2014

1) Freeport Gets Permit to Export Copper Concentrate From Indonesia

1) Freeport Gets Permit to Export Copper Concentrate From Indonesia

2) SBY gives nod to Freeport  deal, lower export duties 
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http://www.thejakartaglobe.com/business/freeport-gets-permit-export-copper-concentrate-indonesia/

1) Freeport Gets Permit to Export Copper Concentrate From Indonesia

By Reuters on 11:04 pm Jul 25, 2014
Jakarta. Freeport-McMoRan has obtained a permit to resume exports of copper concentrate from Indonesia after a six-month stoppage, the head of its Indonesian unit told Reuters late on Friday.
Freeport, Indonesia’s top copper producer, is one of the first companies to get an export permit after the government introduced a new rules on mineral exports in January.
“We just have to make some preparations before we can start exporting. In terms of permitting, everything is OK,” Freeport Indonesia chief executive Rozik Sutjipto said, adding that the firm would now need to pay a higher royalties and a tax on its exports.
“We have signed the MoU [memorandum of understanding] with the government, we have placed a bond for the smelter and we got a recommendation from the director general … From there we went to the trade ministry and got the export permit,” Sutjipto said.
Sutjipto said the firm expected to be able to resume shipments in early August.
“We still have to load the ship, and this may take a few days,” Sutjipto said. He said it would take around a week to ramp up concentrate output to normal levels from the massive mine in Papua, up from around 40 percent of those levels at present.
Earlier on Friday, the government approved a new regulation easing the export tax on mineral concentrates for miners planning to build a smelter.
“The finance ministry regulation on the export tax has been signed,” said Deputy Finance Minister Bambang Brodjonegoro.
As part of Friday’s deal, the government reduced Freeport’s copper concentrate export tax to 7.5 percent from 25 percent after the company agreed to pay a bond as a guarantee they will build a smelter later.
The tax rate that Freeport is subject to is part of a new tax regime for mineral concentrate exporters approved on Friday by the finance ministry.
“The 7.5 percent rate is not automatic, and is connected to their spending on a [smelter] guarantee bond and a percentage from the cost of their investment,” Bambang said.
In January, Indonesia imposed an escalating tax policy, which penalized any company that had not made progress on building a smelter by slapping them with a 25 percent tax on copper concentrate exports or a 20 percent tax on lead, zinc, iron and manganese shipments. The tax was due to increase annually to 60 percent in 2017.
The tax was intended to force miners to develop smelters and mineral processing facilities and part of a government push to derive bigger returns from Indonesia’s mineral resources. But rather than pay it, most miners stopped exporting from Southeast Asia’s biggest economy and one of the world’s top mineral producers.
The government also banned the export of unprocessed ore, and that ban will remain in place.
Reuters

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2) SBY gives nod to Freeport  deal, lower export duties 
Ina Parlina and Raras Cahyafitri, The Jakarta Post, Jakarta | Business | Fri, July 25 2014, 10:28 AM
President Susilo Bambang Yudhoyono has approved a deal on a renegotiated mining contract involving a subsidiary of US-based giant Freeport-McMoRan Copper & Gold, PT Freeport Indonesia, three months prior to leaving office.

In a limited Cabinet meeting on Thursday, the president gave his approval to mining contracts that have been renegotiated, including that with Freeport, Coordinating Economic Minister Chairul Tanjung said. “If there is anything that needs to be followed up, it must be done quickly,” Chairul said.

The government is struggling to renegotiate a number of previously approved contracts of work (CoW) for minerals and coal that have to be adjusted in line with the 2009 Mining Law. As many as 107 CoW are subject to renegotiation, covering six main issues.

Earlier this month, the government announced that Freeport Indonesia had agreed in principal to the renegotiation of the six issues. The deal will be sealed under a memorandum of understanding (MoU) that will form the basis for the drafting of the amended CoW.

“After they comply with the MoU, the Energy and Mineral Resources Ministry will issue an export recommendation for Freeport to the Trade Ministry, which will issue export permits,” Chairul said. The MoU is expected to be signed soon after Idul Fitri.

In a Freeport-McMoRan statement released late on Wednesday, it said that under the MoU, Freeport Indonesia would agree to provide a US$115 million surety bond to support its commitment to building a smelter, pay lower export duties that will decline as the smelter construction progresses and pay increased royalties of 4 percent for copper and 3.75 percent for gold from the current rates of 3.5 percent and 1 percent, respectively.

Freeport has halted its copper-concentrate exports since Jan. 12, when the government imposed a mineral-ore export ban in compliance with the mining law. The government has actually relaxed the ban by allowing exports of semi-finished products, such as concentrate, until 2017 subject to export duties.

Freeport and other semifinished mineral producers have criticized the regulation, saying the duties, which are regulated under a Finance Ministry regulation and start from 20 percent, gradually increasing to 60 percent in 2016, are too harsh. Moreover, Freeport and another copper miner PT Newmont Nusa Tenggara, a subsidiary of Newmont Mining Corp., claim the export duties contravene their CoW.

The government has insisted companies complete their renegotiations before moving on to talks about reducing export duties for mineral producers committed to building smelters.

Following the approved renegotiations, the president also approved the issuance of new export duties for companies willing to build smelters.

“[The president told] the Finance Ministry to issue a new regulation on export duties for companies that have already complied with the Mining Law and the existing government regulation,” Chairul said.

He declined to reveal the new scales of export duties the companies will be expected to pay.

Freeport hopes to resume exports in August. “In the event that Freeport Indonesia is unable to resume normal operations for an extended period, the company intends to implement plans to reduce operating costs, defer capital expenditures and implement workforce reductions,” it said.

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