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Indonesia Bans Bauxite Exports

Budd Indonesia wishes to share the following translation of a an article published by financedetik.com on the new ban on bauxite exports:

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The government officially banned bauxite exports starting June 10, 2023 in accordance with the policy statement issued by President Joko Widodo (Jokowi) in December 2022.

“Bauxite has indeed been banned,” said Minister of Energy and Mineral Resources Arifin Tasrif at the Ministry of Energy and Mineral Resources, Jakarta, Friday (9/6/2023) yesterday.

Arifin is also ready if the ban on bauxite exports starting June 10 2023 is challenged, as was the case with the nickel export ban policy which was sued by the World Trade Organization (WTO). Arifin said, if the export ban is challenged, his party will file a counterclaim.

“If we are sued again, we will sue again. Can the bauxite be returned later or not if we have dug it? It won’t come back,” he said.

Until now, Arifin ensured that there had been no complaints from the buyer country. Arifin also said that the government does not want to sell raw goods.

“Nothing, hopefully there isn’t one, you understand other countries. How come we are told to sell stone goods like that,” said Arifin.

In line with that, his party also asked business actors to commit to building a smelter. According to him, business actors must also create added value in the country.

“Yes, they should want to build it (a smelter). Let’s work together, in principle, we will build it here, create value from here as well. This is part of sharing,” explained Arifin.

However, according to Arifin, the government is still maintaining its exceptional authorisation for the export of copper commodities. That way, PT Freeport Indonesia (PTFI) still has the opportunity to export after June 10.

This copper export will consider the progress of the smelter construction and the investments that have been disbursed.

“Copper, by looking at the physical progress and funds that have been spent, is still given a chance, but he has to finish it, by the middle of next year 100%,” he said.

One of the provisions of this export leniency is that the progress of smelter building has reached over 50%. Even though some leeway might be given to companies whose smelter building projects had progressed well, Arifin said he would issue a fine in other cases.  Arifin himself has not disclosed the amount of the fine.

“Yes, we see what is permissible is the one whose progress is above 50%, the average is already more, then a lot of money is spent. So if for example a stall is not continued, it’s a shame too. But we still have to fine it, there is a fine,” he explained.

For your information, the Ministry of Energy and Mineral Resources previously said that it would provide export relaxation for a number of commodities until May 2024. At that time, the government was in the middle of preparing a draft regulation for the Minister of Energy and Mineral Resources to accommodate export concessions.

Arifin Tasrif said, the substance of the draft regulation is limited to copper, iron, lead, zinc, and anode sludge resulting from copper refining. This leeway is given to companies whose smelter construction progress reaches 50% in January 2023.

“Then it can only be given to IUP/IUPK holders whose progress in the construction of refining facilities has reached 50% in January 2023, which can also be revoked if there is no progress in the construction of refining facilities,” he said in a working meeting at Commission VII DPR, Jakarta, Wednesday (24/ 5) then.

Based on the data presented by Arifin, there are 5 business entities that have progress in constructing metal mineral concentrate refining facilities above 50%. He said, PT Freeport Indonesia (54.52%) for copper commodities, PT Amman Mineral Nusa Tenggara (51.63%) for copper commodities, PT Sebuku Iron Lateritic Ores (89.79%) for iron commodities, PT Kapuas Prima Coal (100 %) for lead commodities, and PT Kapuas Prima Coal (89.65%) for zinc commodities.

“Based on verification from an independent verifier, as many as 5 business entities have progressed in the construction of metal mineral concentrate refining facilities above 50%,” he said.

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Information provided by

FRANS WERNER LIMAHELU, BUDD INDONESIA

Ph./Fax: +62 21 2147 1954, Mobile: +62 812 929 6363

Email: frans@budd-pni.com

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