News 06 Jan, 2014

Indonesia - Ban on the Export of Unprocessed Minerals

Translations: Chinese Chinese  Vietnamese Vietnamese 

In May 2012 the Managers advised Members in a website news article of the introduction of a ban by the Indonesian Government regarding the export of unprocessed minerals such as nickel ore, bauxite and iron sand. The ban was part of a drive to encourage mining companies to build smelting plants in Indonesia and applied to exporters not in possession of the required licenses and approvals. However, companies committing to build smelting plants were permitted to export unprocessed minerals in the interim. The ban was revoked in late 2012 following a legal challenge in the Supreme Court, prompting a significant increase in the number of shipments.

In a recent development, Club correspondents Spica Services, Jakarta have advised that an article has been published in the Indonesian press stating that part of the original legislation, namely the banning of unprocessed minerals for export, will nevertheless enter into force on 12 January 2014 as originally planned. Although it appears that the exportation of all unprocessed minerals will be prohibited as from this date, it seems that such cargoes may continue to be shipped out of Indonesia by authorised exporters in possession of a valid export license and an approval for specific cargo consignments. However, since discussions are ongoing in Indonesia, the precise scope of the ban may change in due course possibly leading to a dilution of the regulatory requirements if, for example, mining companies are willing to pay higher export taxes in order to export some of their unprocessed minerals.

The situation regarding Indonesian coal is currently unclear, but it is thought that the grades of coal most commonly presented for export will not be affected in the short term.

Members with vessels either loading or destined to load unprocessed minerals in Indonesian ports which will not complete prior to 12 January 2014 should check whether the exporter has obtained the required license and shipment approval. If the exporter does not hold such documentation it is important to recognise that vessels which are not due to complete loading until after 12 January 2014 may encounter difficulties leading to delays and disputes or may be ordered to discharge their cargo before being allowed to sail from Indonesia.

Consequently Members with vessels which are loading or are due to load unprocessed mineral cargoes in Indonesian ports, or who may be considering such a fixture, are advised to verify that the exporter has obtained the necessary export permit and approval documents. Copies may be sent to the Club thereafter so that they may be checked for validity and accuracy by the Club’s local correspondent.

Members requiring any further guidance should contact the Loss Prevention department.