No Tax Easing for Mining Companies

TEMPO.CO, Jakarta -  For a number of times, mining companies, including US-based Freeport Indonesia and Newmont Nusa Tenggara, have been asking for lower export duties for shipments of semi-processed mineral products. But Finance Minister Chatib Basri is adamant that there would be no tax easing without exports recommendation from the Ministry of Energy and Mineral Resources.

"The Finance Ministry focuses on exports duties based on the Energy Ministry's rule," Chatib told Tempo yesterday.

Mining companies will receive tax reprieves if they can prove they are serious about building smelters in the country. To win the tax reprieve, miners must pay the government security bond for smelter construction and agree to supply smelter-building companies with concentrates. Freeport and Newmont have committed to pay US$ 100 million and US$25 million in security bonds, respectively.

Chatib said that an independent team will oversee smelter construction. The team was formed last week, comprising of experts from universities and research institutes.

Yesterday, Newmont warned the government that they would reduce production starting in June. The gold and copper mining company operating in West Sumbawa said their copper storage facility at Batu Hijau mine will be full by the end of this month because they have not received the export license.

A disrupted production would result in the housing of a number of employees "to conserve and maintain the company's ability to operate normally and on time," Newmont president director Martiono Hadianto said through in a written statement. "Most of our employees will be sent home with their salaries cut beginning in early June," he said.

Mining analyst Marwan Batubara asked the government to be firm and not be provoked by threats of layoffs. "This is an old tactic. They clash with employees to influence the government to cancel the export ban," he said. Marwan hopes the government will soon demand all mining companies to keep their promises to build smelters.

BERNADETTE CHRISTINA | ANGGA SUKMA | JAYADI SUPRIADIN | MUCHAMAD NAFI