Client Newsflash

Raw Mineral Export Duty Dramatically Reduced to Incentivize Smelter Construction

On July 25, 2014, the Minister of Finance (MOF) dramatically reduced export duties on unrefined metal minerals for companies that are taking concrete action toward building smelting facilities.

MOF Regulation No. 153/PMK.011/2014 (“MOF 153/2014”) was drafted to address concerns raised by mining companies who are required to build smelting facilities while at the same time paying escalating export duty. Companies had argued that paying high export duty both undermined the profitability of their operations and drained potential funding for smelter investment.

♦ Past Export Provisions

Under the current set of regulations on mineral export,¹ metal minerals must be refined to a very high standard before they can be exported, but eight specific mining products (concentrates of copper, zinc, lead, and manganese, iron sand, iron ore, anode slime and copper telluride) are allowed to be exported with minimal processing. Mining companies who continue to export unrefined minerals must demonstrate their progress in developing a smelting facility to the Ministry of Energy and Mineral Resources (MEMR) and Ministry of Trade (MOT), and must also pay progressive export duties, with tariffs increasing from 20-25% in the first semester of 2014 to 60% on December 31, 2016,² after which all export must cease.

♦ Export Duty Reduced to 7.5%, 5% and 0% for Companies Developing Smelters

Under MOF 153/2014, export duty will be dramatically reduced in accordance with the stage of
project development:³

Stage 1 = 7.5% export duty for progress up to 7.5%, including deposit of a “seriousness guarantee” of 5% of the project value

Stage 2 = 5% export duty for progress of 7.5% – 30%

– Stage 3 = 0% export duty for progress beyond 30%

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August 15, 2014,


Disclaimer:
The foregoing material is the property of AKSET and may not be used by any other party without prior written consent. The information here in is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances.


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