News 11 May, 2012

Indonesia - Export of Unprocessed Minerals including Nickel Ore

Translations: Chinese Chinese 

On 6 May 2012 the Indonesian government began enforcing the provisions of Ministry Regulation No.7/2012 "Improvement of Added Value of Minerals through Minerals Processing and Purification Activities". The Regulation prohibits the export of various unprocessed ores (including nickel, copper, iron, iron sand, bauxite, chromium, lead, zinc and manganese) by mining companies who obtained their production licences before 6 February 2012. The legislation is intended to encourage the development of mineral processing plants in Indonesia.

Exceptions may be made in the case of mining companies which:

  • Have a Production Operation IUP (mining licence) with Clear and Clean (C&C) mineral status
  • Sign an integrity pact to stop exporting unprocessed minerals by 2014
  • Submit a detailed proposal regarding the setting up of refining/smelting facilities prior to 2014

In addition, ores produced by mining companies meeting the foregoing conditions are now subject to a substantial export tax.

The Regulation has been met with vigorous opposition by the mining companies and it is unclear to what extent the trade in unprocessed minerals from Indonesia is likely to be affected. However, the Club’s correspondents in Indonesia have reported the following to be taking place in many ports located in Sulawesi and Halmahera: 

  • Vessels that have already completed loading are being allowed to sail
  • Vessels that have not completed loading have been instructed to cease cargo operations. Only vessels with cargo covered by an Export Notification Letter (PEB) issued by Customs before 6 May 2012 are being allowed to sail
  • In the absence of a PEB issued before 6 May 2012, vessels that have not completed loading are being allowed to sail only if they discharge the cargo on board before sailing from Indonesia

At the present time the situation remains very confused.  In some instances Customs have boarded partially loaded vessels to seal the cargo holds pending further developments, and in other cases vessels have been permitted to continue loading.

Given the apparent lack of direction regarding partially loaded ships, local correspondents Spica Services recommend that vessels should sail if they are in a position do so and have obtained the necessary clearances as discharging the cargo beforehand is likely to be costly and time-consuming.

Members with vessels currently on passage to load unprocessed minerals from Indonesia should check that the exporters possess a legitimate IUP and that the cargo is covered by a valid PEB. Similarly, Members intending to fix vessels to load such cargoes should obtain and verify the same information before doing so.

In the event of any concerns, Members should contact the Managers for advice.