On 5 February 2016, the Minister of Energy and Mineral Resources (“MEMR”) issued Regulation No. 05 of 2016 on Procedure for the Issuance of Recommendation for Export Sales of Processed and Purified Minerals (“Regulation 05”).
Regulation 05 revokes the previous MEMR Regulation No. 11 of 2014 and Regulation of the Director General of Minerals and Coal (“DGMC”) No. 861K/30/DJB/2014 on the same matter, and is the follow-up regulation for the new regulation of the Minister of Trade on the exportation of processed and purified minerals.
While this new regulation still requires the recommendation from the DGMC (“Recommendation”), it has simplified the procedure for minerals export, among others by revoking the requirement for minerals producers to have certification as a registered mining products exporter (Eksportir Terdaftar (ET)-Produk Pertambangan).
In summary, Regulation 05 regulates the following main points: (i) Export Sales of Minerals; (ii) Procedure for the Issuance of the Recommendation; (iii) Plan for the Construction of Domestic Refining Facility; (iv) Performance Bond to guarantee the construction of the refining facility.
Export Sales of Minerals
Approval for the export of the minerals (Export Approval) from the Ministry of Trade is only required for the export of metal minerals which have passed the minimum processing standard but have not passed the minimum refining standard, and for holders of contracts of work for metal mineral mining which have conducted part of the refining process. The Recommendation is a prerequisite for obtaining the Export Approval.
Procedure for Obtaining the Recommendation
To obtain the Recommendation, an application in the form attached to Regulation 05 must be submitted to the MEMR c.q. the DGMC by enclosing, among others, (i) the Plan of the Construction of Domestic Refining Facility (“Refining Plan”) which has been approved by the DGMC on behalf of the MEMR; and (ii) proof of the placement of the Performance Bond.
Under Regulation 05, the DGMC is supposed to issue its decision on the Recommendation within no longer than 20 (twenty) calendar days as of the date the application is declared as completely and correctly submitted. The Recommendation is valid for 6 (six) months and is extendable for another 6 (six) months upon its expiry on the condition that the refining facility construction has been realized to a certain degree. The extension application is to be submitted at the fastest 45 days and at the latest 30 days before the expiration date of the Recommendation.
The Refining Plan must include a schedule for the refining facility construction, the construction technology, the investment value and the facility’s capacity per year. The DGMC’s approval is to be issued within no longer than 25 days as of the acceptance of the complete and correct application documents.
The Performance Bond requirement applies to mineral producers who are holders of:
- IUP OP or contracts of work for metal minerals which intend to construct the refining facility themselves;
- IUP OP or contracts of work for metal minerals which intend to construct the refining facility in cooperation with holders of IUP OP for metal mineral, holders of contracts of work for metal mineral, holders of principle licenses for processing and/or refining, or holders of specific IUP OP for processing and/or refining;
- Production Operation IUP specifically for processing and/or refining which intend to construct the refining facility themselves and have been processing ore into metal mineral concentrates.
(the “Mineral Producers”)
The amount of the Performance Bond (“PB”) requires the approval of the MEMR, for which an application must be submitted to the MEMR c.q. DGMC by using the prescribed form attached to Regulation 05. Regulation 05 provides guidance for the calculation of the PB amount. This PB must be placed in an escrow account in a state-owned bank in Rupiah. The PB does not affect the obligation of the Mineral Producers to increase the added value of their mining products domestically.
The liquidation of the PB may be applied for upon the completion of 60% of the construction of the refining facility within the 6 months period. Mineral Producers who failed to complete the facility within the first 6 months period will be given 2 grace periods of 6 months each, at the end of which the PB will be liquidated by the DGMC and the amount will be transferred to the state account in the event that the refining facility construction is still not completed.