Mining companies in Indonesia must refine or process mining products domestically. Mining companies can construct their own smelter or enter a cooperation with other mining or smelter companies through the sale and purchase of ore or concentrate, or the joint construction of a smelter, subject to the approval of the Ministry of Energy and Mineral Resources (MEMR) or governor (as applicable).
Mining products may be exported only after the company:
- satisfies the minimum level of processing and/or refining;
- obtains an export recommendation from the MEMR;
- obtains export approval from the Ministry of Trade; and
- pays export duties.
MEMR Regulation 25/2018 on Coal and Mineral Mining Business, as amended by MEMR Regulation 50/2018 (MEMR 25/2018) provides the minimum level of processing and refining for different mining products.
Pursuant to Article 17 of MEMR 25/2018, until January 11, 2022, metallic minerals such as copper, iron ore or sand, manganese, lead, zinc, ilmenite and titanium can be exported, provided that they have been processed in accordance with the minimum processing requirement under MEMR 25/2018.
Other minerals such as nickel, bauxite, tin, gold, silver and chromium must be refined according to the minimum refinery requirements under MEMR 25/2018 before being exported.
The obligation to satisfy the minimum refinery or processing requirements does not apply for minerals that are due to be used domestically or for R&D purposes through the delivery of samples to other countries.
Article 32 of MEMR 25/2018 enables the MEMR to control the sale of minerals by stipulating the amount and type of:
- minerals for the fulfilment of domestic needs (domestic market obligation); and
- minerals that can be sold abroad.
Reproduced with permission of Law Business Research Ltd. This article was first published in Lexology Getting the Deal Through – Mining 2019 (Published: July 2019). For further information, please visit www.gettingthedealthrough.com.
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