memr regulation no. 7 - 2012

IMPLEMENTATION OF MEMR REGULATION NO. 7/2012RELATED ENHANCEMENT OF MINERAL ADDED VALUE

THROUGH MINERAL PROCESSING AND REFINING ACTIVITY

DIRECTORATE GENERAL OF MINERAL AND COALMINISTRY OF ENERGY AND MINERAL RESOURCES

Jakarta, June 2012

Table of Contents

I. PREFACE................................................................................................................ 3

II. MAIN POINT OF MEMR REGULATION NO7/2012............................................. 10

III. CURRENTCONDITION........................................................................................... 15

IV.FOLLOWUP............................................................................................................. 21

V. REQUIREMENTS FOR RECOMMENDATION OFREGISTERED EXPORTER & EXPORT

PREFACEI.

1. Mineral and coal is non-renewable resources that must be managed by state

government, then the management should provide added value for national

economic to achieve prosperity and welfare of the people.

2. To reach the goal in point 1 above, so the management of mineral and coal

mining must give benefits, fairness and balance, as well as alignments to the

interests of the nation.

3. Based on regulation that stated in Law Number 4 Year 2009 about Mineral and

Coal Mining, there’s an obligation in increasing the value-added of mineral and

coal through local processing and refining industry.

I. PREFACEI.1. Problem Background

MEMR Regulation No 7/2012Feb 6th 2012

Law No 4/2009 Jan 12th 2009

Inventory of processingand refining facilities plan

Feb 2010 – Jan 2012

Government Regulation No 23/2010Feb 1st 2010

Due Date for IUP OP and Contractof Work holders

in Operation Production Activity StageJanuari 12th 2014

National IUPReconciliation

May 3rd – 6th 2011Mineral

Processing

and Refining

in Local

Industry

Government Regulation No52/2011

(Tax Facilities)Dec 22nd 2011

_ Certainty of supply

_ Development of upstream

industry

_ Research and developmen

I. PREFACE (Continued)I.2. TIMELINE OF MINERAL PROCESSING ANDREFINING

MEMR Regulation No 11/2012May 16th 2012

Problem:• There are big numbers of nickel ore export in

2011 (33 million tonnes), that increases for800% compared to year of 2009 when Law No4 Year 2009 released. This condition doesn tencourage local Nickel/Stainless Steelindustry.

Nickel Ore Export (Million Ton)

Economic Impact:• Encourage local nickel processing industry

with demand of nickel ore 18 milliontonnes/year.

Policy strategy:• Synchronization with the laws and

regulations.• Apply DMO regulation to fulfill local demand

of nickel/stainless steel industry.

Rare earth minerals :Scandium, Lantanum,

Yttrium

Added valuefrom ore intometal is 19 X

Problem:There are big numbers of iron ore and iron sand

export in 2011 (13 million tonnes), thatincreases for 800% compared to year of 2009when Law No 4 Year 2009 released. Thiscondition makes iron ore/iron sand reserveswill run out in next 9 years. This conditiondoesn t encourage local steel industry.

Iron Ore Export (Million Ton)

Economic Impact:Encourage local iron ore/iron sand processingindustry (sponge/pig iron) that has capacity for9,5 million tonnes/year , with estimation ofinvestment is about USD 1 billion.

Policy strategy :• Synchronization with the laws and


of steel industry.

Rare Earth Minerals :Vanadium, Titanium

Added valuefrom ore tometal is 4 X

Problem :• There are big numbers of copper ore export in

2011 (14 thousand tonnes), that increases for800% compared to year of 2009 when Law No4 Year 2009 released.

• Capacity of local processing and refiningindustry (copper cathode) only absorbs about30% of total concentrate production.

• ±0,01% concentrate that has precious metalshas been processed outside the country.

Copper Ore Export (Million Ton)

Economic Impact:• Encourage local processing and refining

industry that process copper concentrate intocopper cathode with capacity 425 thousandtonnes/year with estimated investment aboutUSD 1,4 billion.

• Increase competitiveness of copperdownstream industry that produce wires, PCB,and another electronic components.

Policy Strategy :• Synchronization with the laws and


of steel industry.

Rare earth minerals :Platina, Paladium,

Selenium, Telurium

Problem :• There are big numbers of bauxite ore export in

2011 (40 million tonnes) that increases for500% compared to year of 2009 when Law No4 Year 2009 released. This condition makesbauxite reserves will run out in only 4 yearsand this will not encourage local aluminaindustry.

Bauxite Ore Export (Million Ton)

Economic impact:• Encourage local processing and refining industry that

process bauxite ore into Alumina with capacity 7million tonnes/year, with estimated investment aboutUSD 8,4 billion

• Demand of Alumina from PT. INALUM in about 500thousand tonnes/year can be supplied locally.

Policy strategy :• Synchronization with the laws and


of Alumina industry.

Rare earth minerals :Titanium, Tantalum,

Scandium, Lantanum,Yttrium)

Added valuefrom ore to

metal is 30 X

MAIN POINT OF MEMR REGULATIONNO. 7/2012II.

II.1. Mineral Added Value Procedures

II. MAIN POINT OF MEMR REGULATION NO.7/2012

Metallic Mineral

Rock Mineral

Non-Metallic Mineral

Processing

Processing

Refining

II.2. Implementation of Mineral Added Value

II. MAIN POINT OF MEMR REGULATION NO.7/2012 (Continued)

IUP OP

Own the Plant

Cooperation

Third-PartyIUP/IUPK OP

Processing andRefiningIUP OPK

SellingOre/Concentrate

Processing andRefining Activity

BuildInfrastructure

II.3. Implementation of Mineral Added Value

• IUP/IUPK Exploration due to feasibility study, is not profitable to do

processing and/or refining activity or can’t create a joint operation

project and/or cooperation, should consult to Director General.

• Based on the results of consultation, Director General can nominate

another IUP/IUPK Production Operation and/or IUP OPK Processing

and Refining to process and refine those commodities as long as meet

its specifications and its capacity.


Director General can facilitate IUP Production Operation, IUPK

Production Operation, and/or IUP OPK Processing and Refining to

accomodate ore/concentrate from another IUP Production Operation,

IPR, IUP OPK Transport and Sale that is not profitable to do their own

processing and refining activities, as long as meet its specifications

and its capacity.

IV.4. Implementation of Mineral Added Value(continued)


CURRENT CONDITIONIII.

Source: Geology Agency, 2010

III. 1. Mineral Metal Resources danReserves

III. CURRENT CONDITION

III.2.1. Status OF IUP (I,II,III, and IV announcement) - 31 May 2012 update

TOTAL IUP IUP C&C IUP NON C&C

10.361 4.496 5.865

IUP MINERAL COAL

TOTAL 2.688 1.808

TOTAL 4.496

III.2.2. Discription of IUP C & C of 31 May 2012

III.2.3. Discription of IUP Non C & C of 31 May 2012

IUP MINERAL COAL

TOTAL 4.015 1.850

TOTAL 5.865

III.2. STATUS OF IUPIII. CURRENT CONDITION (Continued)

III.2.4. Recapitulation of IUP Minerals Per Activity Phase (update 31 May, 2012)

NO IUP PHASE TOTAL IUP IUP C&C IUP NON C&C

1 EXPLORATION 2.879 1.090 1.789

2 OPERATION PRODUCTION 3.824 1.598 2.226

TOTAL 6.703 2.688 4.015

NO IUP PHASE TOTAL IUP IUP C&C IUP NON C&C

1 EXPLORATION 2.410 1.063 1.347

2 OPERATION PRODUCTION 1.248 745 503

TOTAL 3.658 1.808 1.850

III.2.5. Recapitulation of IUP Coal Per Activity Phase (update 31 May, 2012)

III. CURRENT CONDITION (Continued)

III.3. Recapitulation of Processing & Refining Plan Document(Update 31 May, 2012)1. PROCESSING & REFINING EXISTING : 7

COMPANY2. PROCESSING & REFINING PROPOSAL BEFORE MEMR REGULATION NO 7 YEAR 2012

: 24 COMPANY3. PROCESSING & REFINING PROPOSAL AFTER MEMR REGULATION NO 7 YEAR 2012

: 126 COMPANY

TOTAL : 157 COMPANY


III.4. Recapitulation of Consultation Request (update 31 May2012)No Request Amount

1 Certificate C&C Request 76

2 Certificate C & C that have been published 55

3 Requesting of Recommendation of Registered Exporter 156

4 Recommendation of Registered Exporter that have been published 46

5 Recommendation of Approval Export Letter that have been published 2


FOLLOW UPIV.

Minister of Trade Regulation No. 29/M-DAG/PER/5/2012 regarding Export

Mining Product Regulation (7 May, 2012)

MEMR No. 11 Year 2012 regarding Amendment of MEMR No. 07/2012

about Enhancement of Mineral Added Value Through Processing and

Refining Activity (16 May, 2012)

Minister of Financial Regulation No. 75/PMK.011/2012 regarding

Determination of Export Goods for the applied duty and duty tariff. (dated

16 May, 2012)

Director General Regulation No. 574.K/30/DJB/2012 regarding Procedures

and Requirement of Export Recommendation for Mining Product (11 May,

2012)

IV.1. Follow Up of MEMR No. 7/2012

IV. FOLLOW UP

In order to improve effectiveness of control implementation of sales mineral out of the country, need to

change regulation about enhancement of mineral added value through processing and refining

activity. Therefore at 16 May, 2012 Government has issued MEMR No. 11 Year 2012 regarding

Amendment of MEMR No. 07/2012 about Enhancement of Mineral Added Value Through Processing

and Refining Activity.

Main Point of MEMR No. 11 Year 2012 are between Article 21 dan Article 22 inserted 1 (one) Article,

namely Article 21A, as follows:

(1) IUP Operation Production Holder and IRP referred to in Article 21 can sell ore (raw material or

ore) minerals out of the country if has receiving recommendation from the Minister cq Director-

General.

(2) Recommendation reffered to in paraghraf (1) be given after IUP Operation Production Holder and

IPR reffered to in paraghraf (1) fulfil criteria such as :

a. status of IUP Operation Production and IPR are Clear and Clean;

b. Payment all financial obligation to the state;

c. submit a work plan and / or cooperation in processing and / or refining of minerals in the

country; and

d. signing the integrity pact.

IV.2. MEMR No. 11/2012

IV. FOLLOW UP (Continued)

REQUIREMENTS FOR RECOMMENDATION OFREGISTERED EXPORTER & EXPORTAPPROVALV.

1) copies of certificate C&C;

2) integrity pact;

3) memorandum of understanding with other IUP Operation Production or IUP Operation Production Special for processing

and refining if doing cooperation;

4) work plan establishment processing and refining facility own and/or cooperation processing and refining facility in the

country;

5) copies of sales contract of mining product with end user;

6) copies of Tax Payer Identification Number; and

7) copies of company registration mark.

IUP OP metallic mineral, non metal, rocks, with requirement :

IUP Operation Production Specially for transportation and sales of mineral, with requirement :

1) Copies of IUP Operation Produktion Specially for transportation and sales of mineral;

2) cooperation agreement with the IUP Operation Production holder has signed a integrity pact to build own processing

and refining facilities and / or who have had a memorandum of understanding with other IUP Operation Production or IUP

Operation Production Specially for processing and refining facilities to develop processing and refining facility in the

country;




V.1. Requirement for Recommendation Registered ExporterRecognation

QREGISTERED EXPORTER

& EXPORT APPROVAL

1) copies of IUP Operation Production Specially for processing and refining;

2) work plan to developed processing and refining facility own and/or cooperation to developed

processing and refining facility in the country;




Special IUP OP of processing and refining, with requirement:

V.1. Requirement for Recommendation Registered ExporterRecognation

V. REQUIREMENTS FOR RECOMMENDATION OFREGISTERED EXPORTER

& EXPORT APPROVAL (Continued)

1) copies of Registered Exporter of Mining Product;

2) export plan included are types and ammount of mineral commodities to be exported, tariff

number/HS, port loading, and export destination;

3) data of Resource, reserve dan production;


5) copies of provement of reclamation guarantee placement;

6) copies of provement of payment landrent/deadrent 1 (one) year last; and

7) Copies of provement of payment royalty of metallic mineral 1 (one) year last or proff of

payment tax level II for non-metallic mineral and rock in 1 (one) year last.

IUP OP metallic mineral, non metal and rocks, with requirement:

V.2. Requirement for Recommendation of Export Approval



IUP OP Specially for transportation and sales of mineral, with requirement:




3) data of Resource, reserve dan production;


5) copies of work plan developing of processing and refining facility own and/or cooperation

developing of processing refining ini the country from IUP OP and/or IPR;

6) copies of provement of payment landrent/deadrent 1 (one) year last from IUP OP or IPR and;

7) copies of provement of payment royalty of metallic mineral 1 (one) year last or proff of payment

tax level II for non-metallic mineral and rock in 1 (one) year last from IUP OP or IPR.








4) Cooperating aggreement with IUP OP holder and/or IPR which has receive clear and clea

certificate

5) copies of provement of payment landrent/deadrent 1 (one) year last from IUP OP or IPR and;

6) copies of provement of payment royalty of metallic mineral 1 (one) year last or proff of payment

tax level II for non-metallic mineral and rock in 1 (one) year last from IUP OP or IPR.

IUP OP Specilly for processing and refining, with requirement :




SOP ET RECOMMENDATION AND EXPORTAPPROVAL

Agenda CompanyIUP/IOP OPKNo. Director

GeneralDirector Small

teamPNT

Expertteam

1.

2.

3.

4.

Application

AdministrationEvaluation

TechnicalEvaluation

Recommendation Letter

AdministrationEvaluation

Complete?

No

Yes

Evaluation

Plenary

2014

Registration

Application

Notification :Data Complete

Notification :Data

Uncomplete

OriginalDocument

TechnicalEvaluation

Approval?

Official Memo& LetterConcept

DisapprovalLetter

Yes No

Official Memo& LetterConcept

Approval LetterHandover

recommendationletter

Handover letter ofdisapproval

There is an additional time between notificationand submission of original document

1

2

3a

3b

4

5

7b

7a

6

The issuance of Clean and Clear (CnC) certificate for the

company must meet the following requirements:

1. Administration :

a.No overlapping

b.Permit documents

2. Technical :

a.Exploration report

b.Feasibility study report

c.Environment document approval

3. Finace obligation :

a.Fixed contribution fee

b.Royalties

24 IUP

126 IUP

The Amount of IUP Mineral 5 Comodities CnC = 283 IUP

The Amount of IUP Mineral 5 Comodities NON CnC = 432 IUP

MERM MINISTERIAL REGULATION NO.07/2012

CLOSINGVI.

1. Some mineral commodities (ie nickel, bauxite, iron ore and sand iron and

manganese) mostly sold out of the country in ore formed (raw material / ore).

2. To ensure the sustainability of mineral processing and refining in the country

to the future, then absolute to control of mineral sales out of the country in

ore formed.

3. MEMR. 7/2012 become a strong legal basis for the Government to

encourage companies to increase value added through processing and

refining of mineral in the country.

4. Need the support of all stakeholders to realize increased value added

through the mineral processing and refining of mineral activity in the country

as mandated by Law No. 4/2009.

VI. CLOSING

Contact :

DEDE SUHENDRA

DIRECTOR OF MINERAL

DIRECTORATE GENERAL OF MINERAL AND COAL

Email :

•[email protected]

•[email protected]

Phone : 021- 8307557

fax : 021-83785103

Adress : Jl. Prof. Dr. Soepomo No. 10, Jakarta12870

www.djmbp.esdm.go.id

memr regulation no. 7 - 2012

Documents

local processing

management of mineral

dmo regulation

iron ore export

mineral resourcesjakarta

local steel industry

big numbers of iron

valueadded of mineral