Increase of Added Value of Minerals through Processing and Refining of Minerals Regulation

• Author: William A. Sullivan/Christian Teo Purwono & Partners
• Profession: Licensed Foreign Advocate in Indonesia as well as a Solicitor of the Supreme Court of New South Wales
• Pages: 173-192

CHAPTER 15

Increase of Added Value of

Minerals through Processing and

Refining of Minerals Regulation

I. Executive Summary

1. Overview

1.1 The Minerals Added Value Regulation (hereinafter referred to as

“MoEMRR 7/2012”) was issued with legal effect from February 6,

2012, and by way of the implementation of Articles 102 and 170 of the

2009 Mining Law and Article 96 of GR 23/2010, which provide that

IUP (i.e., mining license) holders are (i) obliged to carry out proces-

sing and refining of mineral products in Indonesia and (ii) prohibited

from exporting mining products before local processing and refining

has taken place.

1.2 MoEMRR 7/2012 will effectively ban the export, from Indonesia, of

mineral products (other than coal) that have not undergone any or

sufficient domestic processing and refining in Indonesia to meet the

minimum value added specifications set out in a schedule to MoEMRR

7/2012.

2. Approach

2.1 Cut-Off Date for Unp rocessed Minera l Exports: Not later than

May 2012, exporters must be able to show that either some local

processing and refining is taking place or there is a credible plan in

place to ensure full lo cal processing and re fining by 2014/2015

while full local processing refining must take place not later than

2014/2015.

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2.2 Relevant Minerals: MoEMRR 7/2012 applies to:

a. Metal minerals;

b. Nonmetal minerals; and

c. Rocks; but

d. Not coal.

2.3 The metal minerals only covered by the domestic processing and

refining requirement are:

a. Copper;

b. Gold;

c. Silver;

d. Lead;

e. Timbal and zinc;

f. Chromium;

g. Molybdenum;

h. Platinum group metals;

i. Bauxite;

j. Iron ore;

k. Iron sands;

l. Nickel and/or cobalt;

m. Manganese; and

n. Antimony.

2.4 Administration: The minimum domestic and processing require-

ment for each of the specified minerals and rocks is set out in a

schedule to MoEMRR 7/2012.

2.5 It is the responsibility of the exporter to ensure that the minimum

level of domestic processing and refining has been carried out.

2.6 The domestic processing and refining may, however, be carried out

by any of:

a. The producer (as the holder of a Production Operation IUP or

IUPK);

b. A specialist third-party processor and refiner (as the holder of a

Special Production Operation IUP/IUPK for Processing and

Refining); or

c. Various other approved and licensed parties.

2.7 Mineral products (covered by MoEMMRR 7/2012) that do not meet

the minimum processing and refining specifications may not be

exported from Indonesia. Such mining products may, however, still be

sold domestically.

3. Sanctions

Producers that fail to meet the minimum domestic processing and refining

requirement are also liable to administrative sanctions that may ultimately

result in the cancellation of their IUPs.

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