PT Newmont Nusa Tenggara (NNT) is hopeful its talks with the government over a controversial export duty will bear fruit although authorities keep saying there is no room for compromise.
Martiono Hadianto, the president director of NNT — the Indonesian unit of US-based Newmont Mining Corporation — indicated Tuesday that an agreement would be reached over the matter and that the company would not go ahead with its plan to seek international arbitration.
“We keep trying to discuss this with the government. I’m optimistic that we can work it out,” Martiono told the press.Beginning Jan. 12, the government formally banned the export of unprocessed mineral ore in line with the 2009 Mining Law. As most mining companies have not built smelters, as required by the law, they have been given until the end of 2016 to continue exporting semi-finished mineral products. The government, however, has attached strings: Companies must obtain export permits and pay a progressive export duty of between 25 and 60 percent during the three-year period.
Mining companies strongly oppose the export duty because the rates are high, exceeding their average profit margins. For some companies, the duty also violates their contracts of work (CoW).CoW holders, such as Newmont and PT Freeport Indonesia — subsidiary of Freeport-McMoRan Copper & Gold Inc. — have argued the export duties violated their contracts.Under the CoW, the contract-holder shall not be subject to taxes, duties or fees by the government except those already stipulated in their agreements.
Finance Minister Chatib Basri said separately that the export duties were aimed at forcing miners to build smelters in the country, as mandated in the Mining Law.“The key point is whether there is a smelter or not. If a company has already built a smelter and has conducted the purification process [to produce metal], it won’t be required to pay an export duty,” Chatib said.
He added that mining companies would also have to prove they had mustered sufficient investment capital as evidence of intent to process minerals domestically.NNT has said that because of the duty it had no plans to export its copper concentrate until later this quarter and would take the time to talk to the government to resolve the issue.
Freeport-McMoRan’s chief executive officer has made marathon visits to a number of ministries to discuss the new regulation, but so far the government has given no indication that it would ease the export duty for the mining giant.Jakarta-based energy sector think tank Reforminer Institute executive director Pri Agung Rakhmanto said the 2009 Mining Law had drawn multiple interpretations because the issuance of technical regulations for the implementation of the export ban had come too late.
“The government has the right to issue any regulation. On the other side, contractors have the right to hold on to agreed contracts,” he said.“The regulations were issued with good intentions, however, the government lacks coordination so there is no certainty. For example, the export duty was not derived from the Mining Law, but was issued by the Finance Ministry.”
He said any exemption to export duties given to CoW holders would discriminate against non-CoW holders and therefore the fairest solution would be arbitration.“Arbitration is a final option. It is also positive because it will clear up how the game is actually played,” he added.
Source:- thejakartapost.com
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