8. Assessment of Industrial Regulations
General Guidelines
Industrial regulations may affect the operating costs, investment costs and the profitability.
This will also affect the logistics (transportation, warehousing, production machinery, production methodologies, etc.)
For certain situation, this will fundamentally affect the investment structure, financing structure as well as the investment decision.
Case #8
Mission: Assess the impact of the following policy changes:
Mining regulations in Indonesia
Before 2012
Raw ore could be exported out with minimal levy (i.e. approx. US$1 per ton)
2012 - Jan 2014
High export levy imposed on exported raw ore (i.e. additional export tax of 20% on "base price" determined by MOF)
After Jan 2014
Export of raw ore banned
Only processed material can be exported
* Amended mining regulation in 2012: Indonesian investors must hold > 51% of a foreign invested mine at the end of 10th years of its production.
* It was also reported in Sept 2014 that a Philippine senator has filed a bill urging a halt to exports of unprocessed mineral ores, similar to the ban by Indonesia.
In 2009, the Indonesian Parliament passed a new Mining Law (Law No.
PT. Newmont Nusa Tenggara Batu Hijau - West Sumbaw...
Capital formation 1865 – 2003 Source: Statistics...
Gold-mine "Yanacocha" bei/ near Cajamarca (Peru)4 of 2009 on Mineral and Coal Mining). The Mining Law has two aspects which have caused a dampening effect on foreign investment in the resources sector. These are:
export of unprocessed minerals after 12 January 2014 is prohibited, requiring mining companies to process and refine their product in Indonesia
accelerated divestment requirement, under which foreign shareholders in companies holding a mining production permit are required to divest shares to achieve majority Indonesian ownership within 10 years from the commencement of commercial production.
Adding Value Requirement:
The Mining Law requires all mineral ores to be processed in Indonesia before being exported. Under the law, raw ores and semi-processed minerals with purity levels...