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RED, Christina Desy
The mineral export ban implemented by the government earlier this year has been met by a variety of responses from mining companies. Some of have complied with the policy, others have chosen to lobby the government—such as PT Freeport Indonesia, and some of have chosen international arbitration as a battleground to challenge the policy—such as PT Newmont Nusa Tenggara (“Newmont”).
Arguing that their business has been harmed by the policy established under Government Regulation No. 1 of 2014, Newmont chose to file a claim at the International Centre for the Settlement of Investment Disputes (ICSID) on 1 July 2014. At the same time as the dispute was being heard, Newmont also sent an invitation to the Indonesian government hoping for the possibility of parallel discussions to renegotiate Newmont’s business work agreement.
The government welcomed Newmont’s proposal but under one condition, Newmont must withdraw their lawsuit from the ICSID. While hesitant at first, Newmont finally agreed to the Indonesian government’s requirement, and the renegotiation process began culminating in the signing of a memorandum of understanding (MoU) between the Indonesian Government and Newmont, at Batu Hijau, last Wednesday (3 September) .
The MoU includes clauses for increased royalties for gold, silver, and copper in accordance with Government Regulation No. 9 of 2012. Furthermore, Newmont must also pay dead-rent of two USD per hectare, and will be subject to a duty of 7.5% on exports of mineral concentrates.
The export duty percentage is also dependent on certain of Newmont’s other obligations set out in the MoU, namely to build a smelter and also make a deposit 25 million USD. However, if the smelter development exceeds 7.5%, the export duty will decrease to 5%, or possibly to 0% if the development reaches more than 30%. Additionally, Newmont must reduce its work area from 87,000 ha to 66,442 ha, and implement a 51% divestment. Finally, Newmont must use domestic components in its business processes.
As the MoU includes amending the work agreement, Martiono Hadianto, President Director of Newmont, estimates that the process should be finalized within six months from when the MoU was signed. Mr. Martiono also indicated that the MoU will be followed by the issue of a Special Mining License (Izin Usaha Pertambangan Khusus). With these developments, it is expected that Newmont will recommence exporting gold and copper concentrate next week.
Jero Wacik Scandal
To carry out mineral concentrate exports, Newmont must secure an Export Approval Letter (Surat Persetujuan Ekspor – “SPE”) from the Minister of Trade (“Minister”), after a recommendation from the Minister of Energy and Mineral Resources is issued. This position is currently held by the alleged corruption suspect, Jero Wacik. However, Minister Muhammad Lutfi, convinced Newmont not to be concerned about any impact on the required processes.
According Mr. Lutfi, the issue of an SPE is not time-consuming, and it will be issued immediately after the recommendation is obtained. Thereafter, Newmont will be granted status as a registered exporter once all requirements are fulfilled.
Mr. Lufti’s optimistic view is based on his calculation of Indonesian export income this year if the export of mineral concentrate is permitted. Based on calculations for the income that will be generated by exports by Freeport, Newmont, and Vale alone, Mr. Lutfi estimates there will be around USD 4.5 billion in additional income for Indonesia.
(hot/kc)
The mineral export ban implemented by the government earlier this year has been met by a variety of responses from mining companies. Some of have complied with the policy, others have chosen to lobby the government—such as PT Freeport Indonesia, and some of have chosen international arbitration as a battleground to challenge the policy—such as PT Newmont Nusa Tenggara (“Newmont”).
Arguing that their business has been harmed by the policy established under Government Regulation No. 1 of 2014, Newmont chose to file a claim at the International Centre for the Settlement of Investment Disputes (ICSID) on 1 July 2014. At the same time as the dispute was being heard, Newmont also sent an invitation to the Indonesian government hoping for the possibility of parallel discussions to renegotiate Newmont’s business work agreement.
The government welcomed Newmont’s proposal but under one condition, Newmont must withdraw their lawsuit from the ICSID. While hesitant at first, Newmont finally agreed to the Indonesian government’s requirement, and the renegotiation process began culminating in the signing of a memorandum of understanding (MoU) between the Indonesian Government and Newmont, at Batu Hijau, last Wednesday (3 September) .
The MoU includes clauses for increased royalties for gold, silver, and copper in accordance with Government Regulation No. 9 of 2012. Furthermore, Newmont must also pay dead-rent of two USD per hectare, and will be subject to a duty of 7.5% on exports of mineral concentrates.
The export duty percentage is also dependent on certain of Newmont’s other obligations set out in the MoU, namely to build a smelter and also make a deposit 25 million USD. However, if the smelter development exceeds 7.5%, the export duty will decrease to 5%, or possibly to 0% if the development reaches more than 30%. Additionally, Newmont must reduce its work area from 87,000 ha to 66,442 ha, and implement a 51% divestment. Finally, Newmont must use domestic components in its business processes.
As the MoU includes amending the work agreement, Martiono Hadianto, President Director of Newmont, estimates that the process should be finalized within six months from when the MoU was signed. Mr. Martiono also indicated that the MoU will be followed by the issue of a Special Mining License (Izin Usaha Pertambangan Khusus). With these developments, it is expected that Newmont will recommence exporting gold and copper concentrate next week.
Jero Wacik Scandal
To carry out mineral concentrate exports, Newmont must secure an Export Approval Letter (Surat Persetujuan Ekspor – “SPE”) from the Minister of Trade (“Minister”), after a recommendation from the Minister of Energy and Mineral Resources is issued. This position is currently held by the alleged corruption suspect, Jero Wacik. However, Minister Muhammad Lutfi, convinced Newmont not to be concerned about any impact on the required processes.
According Mr. Lutfi, the issue of an SPE is not time-consuming, and it will be issued immediately after the recommendation is obtained. Thereafter, Newmont will be granted status as a registered exporter once all requirements are fulfilled.
Mr. Lufti’s optimistic view is based on his calculation of Indonesian export income this year if the export of mineral concentrate is permitted. Based on calculations for the income that will be generated by exports by Freeport, Newmont, and Vale alone, Mr. Lutfi estimates there will be around USD 4.5 billion in additional income for Indonesia.
(hot/kc)
RED, Christina Desy
The mineral export ban implemented by the government earlier this year has been met by a variety of responses from mining companies. Some of have complied with the policy, others have chosen to lobby the government—such as PT Freeport Indonesia, and some of have chosen international arbitration as a battleground to challenge the policy—such as PT Newmont Nusa Tenggara (“Newmont”).
Arguing that their business has been harmed by the policy established under Government Regulation No. 1 of 2014, Newmont chose to file a claim at the International Centre for the Settlement of Investment Disputes (ICSID) on 1 July 2014. At the same time as the dispute was being heard, Newmont also sent an invitation to the Indonesian government hoping for the possibility of parallel discussions to renegotiate Newmont’s business work agreement.
The government welcomed Newmont’s proposal but under one condition, Newmont must withdraw their lawsuit from the ICSID. While hesitant at first, Newmont finally agreed to the Indonesian government’s requirement, and the renegotiation process began culminating in the signing of a memorandum of understanding (MoU) between the Indonesian Government and Newmont, at Batu Hijau, last Wednesday (3 September) .
The MoU includes clauses for increased royalties for gold, silver, and copper in accordance with Government Regulation No. 9 of 2012. Furthermore, Newmont must also pay dead-rent of two USD per hectare, and will be subject to a duty of 7.5% on exports of mineral concentrates.
The export duty percentage is also dependent on certain of Newmont’s other obligations set out in the MoU, namely to build a smelter and also make a deposit 25 million USD. However, if the smelter development exceeds 7.5%, the export duty will decrease to 5%, or possibly to 0% if the development reaches more than 30%. Additionally, Newmont must reduce its work area from 87,000 ha to 66,442 ha, and implement a 51% divestment. Finally, Newmont must use domestic components in its business processes.
As the MoU includes amending the work agreement, Martiono Hadianto, President Director of Newmont, estimates that the process should be finalized within six months from when the MoU was signed. Mr. Martiono also indicated that the MoU will be followed by the issue of a Special Mining License (Izin Usaha Pertambangan Khusus). With these developments, it is expected that Newmont will recommence exporting gold and copper concentrate next week.
Jero Wacik Scandal
To carry out mineral concentrate exports, Newmont must secure an Export Approval Letter (Surat Persetujuan Ekspor – “SPE”) from the Minister of Trade (“Minister”), after a recommendation from the Minister of Energy and Mineral Resources is issued. This position is currently held by the alleged corruption suspect, Jero Wacik. However, Minister Muhammad Lutfi, convinced Newmont not to be concerned about any impact on the required processes.
According Mr. Lutfi, the issue of an SPE is not time-consuming, and it will be issued immediately after the recommendation is obtained. Thereafter, Newmont will be granted status as a registered exporter once all requirements are fulfilled.
Mr. Lufti’s optimistic view is based on his calculation of Indonesian export income this year if the export of mineral concentrate is permitted. Based on calculations for the income that will be generated by exports by Freeport, Newmont, and Vale alone, Mr. Lutfi estimates there will be around USD 4.5 billion in additional income for Indonesia.
(hot/kc)
The mineral export ban implemented by the government earlier this year has been met by a variety of responses from mining companies. Some of have complied with the policy, others have chosen to lobby the government—such as PT Freeport Indonesia, and some of have chosen international arbitration as a battleground to challenge the policy—such as PT Newmont Nusa Tenggara (“Newmont”).
Arguing that their business has been harmed by the policy established under Government Regulation No. 1 of 2014, Newmont chose to file a claim at the International Centre for the Settlement of Investment Disputes (ICSID) on 1 July 2014. At the same time as the dispute was being heard, Newmont also sent an invitation to the Indonesian government hoping for the possibility of parallel discussions to renegotiate Newmont’s business work agreement.
The government welcomed Newmont’s proposal but under one condition, Newmont must withdraw their lawsuit from the ICSID. While hesitant at first, Newmont finally agreed to the Indonesian government’s requirement, and the renegotiation process began culminating in the signing of a memorandum of understanding (MoU) between the Indonesian Government and Newmont, at Batu Hijau, last Wednesday (3 September) .
The MoU includes clauses for increased royalties for gold, silver, and copper in accordance with Government Regulation No. 9 of 2012. Furthermore, Newmont must also pay dead-rent of two USD per hectare, and will be subject to a duty of 7.5% on exports of mineral concentrates.
The export duty percentage is also dependent on certain of Newmont’s other obligations set out in the MoU, namely to build a smelter and also make a deposit 25 million USD. However, if the smelter development exceeds 7.5%, the export duty will decrease to 5%, or possibly to 0% if the development reaches more than 30%. Additionally, Newmont must reduce its work area from 87,000 ha to 66,442 ha, and implement a 51% divestment. Finally, Newmont must use domestic components in its business processes.
As the MoU includes amending the work agreement, Martiono Hadianto, President Director of Newmont, estimates that the process should be finalized within six months from when the MoU was signed. Mr. Martiono also indicated that the MoU will be followed by the issue of a Special Mining License (Izin Usaha Pertambangan Khusus). With these developments, it is expected that Newmont will recommence exporting gold and copper concentrate next week.
Jero Wacik Scandal
To carry out mineral concentrate exports, Newmont must secure an Export Approval Letter (Surat Persetujuan Ekspor – “SPE”) from the Minister of Trade (“Minister”), after a recommendation from the Minister of Energy and Mineral Resources is issued. This position is currently held by the alleged corruption suspect, Jero Wacik. However, Minister Muhammad Lutfi, convinced Newmont not to be concerned about any impact on the required processes.
According Mr. Lutfi, the issue of an SPE is not time-consuming, and it will be issued immediately after the recommendation is obtained. Thereafter, Newmont will be granted status as a registered exporter once all requirements are fulfilled.
Mr. Lufti’s optimistic view is based on his calculation of Indonesian export income this year if the export of mineral concentrate is permitted. Based on calculations for the income that will be generated by exports by Freeport, Newmont, and Vale alone, Mr. Lutfi estimates there will be around USD 4.5 billion in additional income for Indonesia.
(hot/kc)