Indonesia to impose tax on raw mineral exports

May 3, 2012

, JAKARTA, May 3 – Indonesia will begin imposing taxes on exports of raw minerals in a bid to encourage local processing and boost the number of smelters, the energy and mineral resources minister said Thursday.

“We will officially announce a ministerial decree on May 6 to implement a tax on the export of 14 raw minerals at an average of 20 percent,” Jero Wacik told reporters.

“Also under the decree, from May 6 miners can no longer export raw materials unless they submit plans to build a smelter for completion by 2014.”

Wacik said smelters would create more jobs for Indonesians.

“The value of semi-finished products of course is higher than raw minerals,” he said.

The tax is a stepping stone to a planned blanket ban on the export of raw minerals by 2014, one of many moves the government says is aimed at redistributing the benefits of the country’s natural resources from foreigners to Indonesians.

Among the 14 minerals to be taxed are gold, copper, silver, tin, lead and nickel.

One of the world’s biggest copper and gold mines in Indonesia’s Papua province is owned by US-based mining giant Freeport-McMoRan.

The tax comes just over two months after the government imposed a new regulation that obliges foreigners to divest 51 percent of their stakes in Indonesian mining assets after 10 years of production.

Indonesia, Southeast Asia’s largest economy, has some of the world’s biggest untapped mineral reserves.

Foreigners poured a record $20 billion of investment into Indonesia last year, according to government data, as the economy grew by 6.5 percent. Of that money, $3.6 billion went into mining.

Between January and March, mining attracted $1.1 billion, the largest share of foreign direct investment during the period.

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