To stop miners from overexploiting resources to beat a 2014 ban on shipment
Indonesia is considering a hefty tax on mining exports to stop miners from overexploiting resources to beat a 2014 ban on shipments of some unprocessed metals and lower grade coal, an official said yesterday, but the plan may backfire if foreign buyers turn elsewhere.
The proposal to impose a 25 per cent export tax on coal and base metals – rising to 50 per cent in 2013 – was greeted with a mix of confusion and scepticism as both producers and importers across Asia tried to assess its impact.
“Ever since we issued a mining law in 2009, miners have reacted by increasing their production multiple times, exploiting and exporting everything they’ve got,” Mr Thamrin Sihite, director-general for coal and minerals at Indonesia’s Ministry of Energy and Minerals, told Reuters.
“This is dangerous and we need to curb that. We issued a ministerial regulation in February to ban unprocessed mineral ores and this new export tax regulation … We hope the tax will reduce the export rush further. But I can’t tell you when it will be issued.”
The latest tax proposal could join a raft of regulations aimed at increasing government revenues that have worried global mining companies operating in Indonesia, where the fast-growing mining sector makes up about 11 per cent of GDP.
Indonesia, the world’s largest exporter of thermal coal, shipped out US$3.8 billion (S$4.8 billion) worth of copper last year and US$7.3 billion worth of metal ore.
Mineral fuels exports, including coal, were valued at US$27.4 billion.
After a steady flow of regulatory proposals from Indonesia’s mining officials, few of which have been implemented, many in the industry were sceptical. Others in the industry said the new proposal lacked clarity.
The proposed tax also has customers worried with India, Indonesia’s largest coal customer, saying on Tuesday that it would raise concerns about the proposed tax with Jakarta.
Source: Reuters