JAKARTA, Feb 24 (Reuters) – Indonesia will ease a controversial tax on mineral concentrate exports for firms that build smelters in the country, in the first rollback of new rules that have caused its mining industry to grind to a halt.
The move is a potential victory for U.S. mining giants Freeport-McMoRan Copper & Gold and Newmont Mining Corp . A senior government official said Freeport would resume exports of copper concentrate in the “near future”.
Around $500 million a month in ore and concentrate exports have stopped since President Susilo Bambang Yudhoyono in January imposed mining rules, which included the progressive tax and a mineral ore export ban, to force companies to build smelters and process raw materials in Indonesia.
“The export tax can be changed. For those who have seriously committed to building smelters, we will ease it,” said Sukhyar, director general of coal and minerals for the mines ministry. “The export tax can be lowered or maybe eliminated to zero percent.”
By contrast, Indonesian government officials have said over the last few weeks that Jakarta would not back down from the export tax or any of the mining regulations passed last month.
Before the ban, Indonesia was the world’s biggest exporter of nickel ore. It is also a major supplier of refined tin, thermal coal and copper.
Freeport and Newmont have refused to pay the progressive export tax, which rises from 25 percent this year to up to 60 percent by the second half of 2016, saying it breaches their contracts.
High-level executives from the two companies, which together produce virtually all of Indonesia’s copper, have been involved in talks with the government for weeks over the tax and the building of smelters.
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