Mine Enterprise Not Obliged to Build Their Own Smelter

The government said that mineral mining companies are not required to build their own purification and processing (smelting) plant, but they can process mineral ores in existing facilities within the country prior to export.

Bambang Gatot Aryono, Director of Mineral and Coal at Ministry of Energy and Mineral Resources, said that the government would regulate the export ban on mineral ores and concentrates, especially copper and gold, from 2014.

"The law only requires that companies process the concentrate in Indonesia, so that they will have added value before export. It does not mean that the company should build its own smelter," Bambang told IFT.

Mineral mining companies can work together with the existing refining and mineral processing plants in the country, such as PT Smelting in Gresik, East Java and PT Nusantara Smelting in Bontang, East Kalimantan.

Obligations in the domestic mineral processing will be followed by assurance of local supply. The party is discussing the draft of Ministerial Regulation on the implementing regulations of Law No. 4 of 2009 on Mineral and Coal.

Priyo Pribadi Soemarno, Executive Director of the Indonesian Mining Association, asked the government to review the ban on exports of mineral ores and concentrates, because the market does not always receive the finished product. The mineral ore export ban would harm the company, as not all of the processed mineral products will be absorbed by the market.

Bambang Gatot said the Ministerial regulation on the ban on export of ores and mineral concentrates is the mandate of the Law of Mineral and Coal. Article 103 of the Act states that mining permit holders are required to conduct manufacturing and mining in the country.

Previously, PT Newmont Nusa Tenggara, the second biggest copper and gold company in Indonesia after PT Freeport Indonesia, canceled plans to build the smelter at the mine in West Sumbawa, West Nusa Tenggara, because it is not economical. Kasan Mulyono, Public Relations Manager of Newmont, said that the company will utilize the processing plant in Indonesia.

Currently, 20 -30 percent of concentrates from Newmont are processed at the smelter in Gresik. The company will also supply concentrates to the PT Nusantara Smelting in Bontang and is expected to start commissioning in 2014.