Indonesia to Maintain Metal Export Policy Amid Court Ruling

Indonesia, the world’s largest nickel producer, will maintain a policy that tightens exports of mineral ores amid a ruling by the Supreme Court that annulled some articles on the ministerial decree.

“We’re preparing a new regulation to amend the current rule and to bring it in line with the Supreme Court decision” without changing the policy on ore exports, Susyanto, head of legal and public relations at the Energy and Mineral Resources Ministry, said in an interview yesterday. “The decree doesn’t ban exports, because shipments are still allowed under some conditions and that’s not contradicting with any law.”

Asia’s second-largest copper producer, where mining accounted for 12 percent of gross domestic product in 2011, is trying to boost the value of commodity sales to support growth. The country banned exports of 32 types of raw metals, waiving the restriction for companies operating under so-called mining business licenses that are planning to build refineries before a total ban is imposed in 2014. Those shipments are subject to a 20 percent tax.

The ban doesn’t apply to mining companies working under contracts of work such as Freeport-McMoRan Copper & Gold Inc. (FCX) and Newmont Mining Corp. (NEM) Freeport operates the Grasberg gold and copper mine in Papua and Newmont runs the Batu Hijau mine on Sumbawa island.

The Supreme Court annulled four articles of Ministerial Decree No. 7 on mineral processing that was issued in February, including article 21, which bans exports for mining business license holders, Natsir Mansyur, deputy chairman for trade distribution and logistics at the Indonesian Chambers of Commerce and Industry, said Nov. 5.

Verdict Summary

The decision was based on a request from the regencies government association, or Apkasi, according to a copy of a summary of the Supreme Court verdict seen by Bloomberg News. Ridwan Mansyur, the court’s head of public relations, confirmed the summary. He said he couldn’t provide further details on the ruling as the full document isn’t finished. Susyanto said the energy ministry hasn’t received a copy of the ruling.

The energy ministry will file an objection to the Supreme Court to cancel the ruling, as the related 2009 Mining Law is under review by the Constitutional Court, Susyanto, who uses a single name, said.

“Under the Constitutional Court law, the Supreme Court must stop processing a complaint against a supporting regulation if the related law is under a judicial review,” Susyanto said. Ministerial Decree No. 7, which was revised by Decree No. 11, is a supporting rule for the 2009 Mining Law, he said.

Minerals Exports

Under the export rule, the government has issued permits for shipments of 42.53 million tons of nickel ore, 5.82 million tons of iron ore, 1.28 million tons of copper and 16.39 million tons of bauxite since the decree took effect in May, Deddy Saleh, director general of foreign trade at the Trade Ministry, said Nov. 2.

Exports of nickel ore from Indonesia rose 8 percent to 21.1 million metric tons in January to August from a year earlier, the Trade Ministry said Oct. 5. Copper shipments fell 37 percent to 649,435 tons and bauxite dropped 15 percent to 20.6 million tons, the ministry said.

To contact the reporters on this story: Yoga Rusmana in Jakarta at yrusmana@bloomberg.net; Eko Listiyorini in Jakarta at elistiyorini@bloomberg.net

To contact the editors responsible for this story: James Poole at jpoole4@bloomberg.net; Greg Ahlstrand at gahlstrand@bloomberg.net

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