February 16, 2016 / 9:14 AM / in 4 years

UPDATE 1-Indonesia to review rules banning metal concentrate exports from 2017

(Adds details, background)

By Wilda Asmarini

JAKARTA, Feb 16 (Reuters) - Indonesia will review rules banning exports of partially processed metal ores, including copper and zinc, as the smelters they were intended to develop have not materialized amid low commodity prices, the country’s mining minister said Tuesday.

Indonesia banned metal ore exports in early 2014 to encourage firms to build smelters to create jobs and shift exports from raw materials to higher-value finished metals. However, the ban cost the country, the world’s top nickel ore exporter and a major supplier of bauxite for aluminum, billions of dollars in lost revenue.

Since the ban, many of Indonesia’s nickel and bauxite miners have shelved smelter projects amid falling commodity prices. Up to seven projects are expected to be completed this year.

While the 2014 ban has remained intact for nickel ore and bauxite exports, the government gave producers of partially processed metals known as concentrates until 2017 to continue exports if they paid an export tax and developed domestic processing facilities.

Indonesia will this year review the concentrates export ban as part of a revision of the 2009 mining law that led to the export edicts and other regulations, said Energy and Mineral Resources Minister Sudirman Said.

“If no review is done, it is almost certain there will be a lot of breaches,” Said told reporters. “Articles (in rules) that can’t be implemented have no value.”

“Smelters must be built in three years, and that’s while mineral industry prices have dropped. Many mining companies are facing difficulties,” Said told reporters.

The mineral export rules have been a flashpoint between the government, which is constitutionally bound to maximise returns from resources, and companies including U.S. miners Freeport McMoRan Inc and Newmont Mining Corp.

Indonesia’s government in January halted copper exports from Freeport’s Grasberg mine, only agreeing on Feb. 9 to allow them for a six-month period, because of its unhappiness with the progress on a second smelter at the site.

It was not immediately clear if the planned revision of mining rules would ease the ban on nickel ore or bauxite exports.

When asked whether the planned revision of the mining law would affect rules on exports of bauxite and nickel, Coal and Minerals Director General Bambang Gatot told the same group of reporters on Tuesday, “Let’s see ... If it’s not regulated in detail we can make new regulations.” (Reporting by Wilda Asmarini, Writing by Fergus Jensen; Editing by Himani Sarkar and Christian Schmollinger)

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