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Minerals Refinery Investment Environment in Indonesia
Michael Scott Carl
michaelcarl@ssek.com
May 12, 2016 3rd Annual Smelting and Processing Summit, Jakarta
1 SSEK INDONESIAN LEGAL CONSULTANTS
Export Ban • MEMR Regulation No. 1 of 2014 regarding Increase of Mineral
Added Value through Domestic Mineral Processing and Refinery Activities as amended by MEMR Regulation No. 8 of 2015
• Mining companies must perform domestic processing and refining of mining products
• Domestic processing and refining activities may be performed: – By constructing an owned smelter; or – Through cooperation with other mining/smelter companies, in the form of:
• Sale and purchase of ore or concentrate; or • Joint construction of smelter facility
• Any cooperation must be approved by: – Minister of Energy and Mineral Resources (“MEMR”) for PMA companies; – Governor; or – Regent/Mayor
2 SSEK INDONESIAN LEGAL CONSULTANTS
Relaxation of Export Ban
• Exception for export of certain processed minerals: o Copper o Iron ore/sand o Manganese o Lead o Zinc
• Export tax instead applies • Only until January 12, 2017 • There is no exception for nickel, bauxite, tin, gold, silver and
chromium
3 SSEK INDONESIAN LEGAL CONSULTANTS
Export Ban Procedures • MEMR Regulation No. 5 of 2016 regarding Procedures and
Requirements for Granting of Recommendation for Implementation of Offshore Mineral Sale Resulted from Processing and Refinery Activities
• Recommendation period: 6 months and renewable • Requirements to obtain recommendation, among others:
– Clean and clear certificate; – Certificate of Analysis; – Evidence of royalty payment for the last one year; – Construction plan of refinery facility; – Audited report on expenses for constructing refinery facility; – Approved work plan and budget; – Evidence of placement of security deposit for constructing refinery facility; – Report on implementation of environmental obligations; and – Export plan.
4 SSEK INDONESIAN LEGAL CONSULTANTS
Export Ban Procedures • Requirements to obtain renewal of recommendation, among
others: – Previous export approvals; – Report on realization of construction of refinery facility; – Audited report on expenses for constructing refinery facility accumulated
until the last one month; – Report on compliance with water quality standard; – Evidence of royalty payment for the last 6 months; and – Export plan.
5 SSEK INDONESIAN LEGAL CONSULTANTS
Export Ban Procedures • Security deposit amount:
– 5% of the total new investment; or – 5% of the remaining investment for construction of refinery facility.
• Security deposit may only disbursed if the construction of refinery facility has reached 60% of the planned construction
• If the targeted construction period is not achieved, the company is given with an extension period of maximum one year to complete the construction, otherwise the security deposit cannot be disbursed
6 SSEK INDONESIAN LEGAL CONSULTANTS
Shifting of Authority
• New Regional Governance Law (Law No. 23 of 2014) on October 2, 2014: o Regent’s authority in issuing mining and smelter licenses is
shifted to Governor o Regional Government (Regents and Governor) no longer
has the authority to issue mining and smelter licenses for foreign owned companies (PMA companies) MEMR’s authority
This will be reflected in the New Mining Law
7 SSEK INDONESIAN LEGAL CONSULTANTS
Draft New Mining Law Genesis • Shift in authority of local government over mining Minerals Processing and Refinery • No change on domestic processing and refinery requirements • There will be fiscal and non-fiscal incentive for companies
conducting domestic processing and refinery activities Transitional Provisions • One year adjustment period for Contracts of Work (COW) to be
converted into Special IUPs (IUPK) • Five year adjustment period for copper COW holders and iron
sand/ore, lead and zinc IUP holders to conduct domestic processing and refinery for all of its mineral production
9
Applicable Export Tax 12 Jan – 31 Des 2014
1 Jan – 30 Jun 2015
1 Jul – 31 Des
2015
1 Jan – 30 Jun 2016
1 Jul – 31 Des 2016
Copper concentrate (Cu ≥ 15%) Minimum Processing Requirements
25% 35% 40% 50% 60%
Iron concentrate (Fe ≥ 62%) Minimum Processing Requirements
20% 30% 40% 50% 60%
Iron concentrate (Fe ≥ 51% and Al2O3+SiO2 ≥ 10%) Minimum Processing Requirements Manganese concentrate (Mn ≥ 49%) Minimum Processing Requirements
SSEK INDONESIAN LEGAL CONSULTANTS 8
10
Applicable Export Tax 12 Jan – 31 Des 2014
1 Jan – 30 Jun 2015
1 Jul – 31 Des 2015
1 Jan – 30 Jun 2016
1 Jul – 31 Des 2016
Lead concentrate (Pb ≥ 57%) Minimum Processing Requirements
20% 30% 40% 50% 60%
Zinc concentrate (Zn ≥ 52%) Minimum Processing Requirements
Ilmenite concentrate and Titanium concentrate (Fe ≥ 58% (sand) and Fe ≥ 56% (pellet)) Minimum Processing Requirements
SSEK INDONESIAN LEGAL CONSULTANTS 9
10 SSEK INDONESIAN LEGAL CONSULTANTS
Final Income Tax
• Effective on August 6, 2015 • For export and domestic sale of coal and processed minerals • Rate: 1.5% of the sale price • Income Tax Article 22 Final Income Tax
– Payable upon any sale of minerals or coal – Regardless the company is profitable or not
• Only applicable to mining companies holding Mining Business License (Izin Usaha Pertambangan or IUP)
• Not applicable to the holders of COW (Contract of Work) and CCOW (Coal Contract of Work)
11 SSEK INDONESIAN LEGAL CONSULTANTS
Foreign Shareholding Limitation and Divestment Requirement
Smelter Companies • 100% open for foreign ownership • No divestment requirement
Mining Companies • 100% open for foreign ownership if establishing a new company to bid for a
mining license • Divestment requirement after 5 years of commercial production • Divestment requirement is gradual from 6th through 10th or 15th year after
commercial production MEMR Regulation No. 27 of 2013 (September 13, 2013) • 75% maximum foreign ownership if acquiring an existing mining company in
the exploration stage • 49% maximum foreign ownership if acquiring an existing mining company in
the operation production stage
Note: Foreign ownership includes both foreign companies and Indonesian companies with direct or indirect foreign shareholders
12 SSEK INDONESIAN LEGAL CONSULTANTS
Foreign Shareholding Limitation and Divestment Requirement
Maximum Foreign Ownership after Divestment: (Government Regulation No. 77 of 2014) • 49% mining companies which do not conduct their own processing
and/or refining (i.e., a mining company with no internal smelting capacity)
• 60% mining companies which conduct their own processing and/or refining (i.e., a mining company with internal smelting capacity)
• 70% mining companies which conduct underground mining (in whole or combined with open-pit mining)
Divestment Requirement to sell shares to Indonesian parties, which include:
– Central Government – Regional Government – State Owned Enterprise – Regent Owned Enterprise – Indonesian private business entities
13 SSEK INDONESIAN LEGAL CONSULTANTS
Foreign Shareholding Limitation and Divestment Requirement
Year after commercial production
Mining companies conducting
underground mining (in whole or
combined with open-pit mining)
Mining companies conducting their own
processing and refining
Other mining companies
6th 20% 20% 20% 7th - - 30% 8th - - 37% 9th - - 44%
10th 25% 30% 51% 15th 30% 40% -
Gradual divestment from the 6th through 10th or 15th year after commercial production for Mining Companies owned by foreigners before the issuance of MEMR 27/2013 or acquired during the exploration stage:
14 SSEK INDONESIAN LEGAL CONSULTANTS
Typical Foreign Ownership Structures
Smelter Company
Combined Smelter and Mining Company
51 % 40 %
49 %
100 %
60 %
Foreign Investor
Foreign Investor
Indonesian Investor
Indonesian Investor
Mining Company
Separate Smelter and Mining Companies Combined Smelter and Mining Company
15 SSEK INDONESIAN LEGAL CONSULTANTS
Fiscal and Non-Fiscal Incentives Fiscal Incentive • Tax Allowance or Tax Holiday • Exemption of Import Duty, VAT and other taxes Non-Fiscal Incentive • One stop service investment licensing process • Stipulation as Industrial Vital Object • Electronic Investment Licensing and Information Service system • Customs facility:
– Rush Handling – Storage or dismantling outside customs area – Temporary import – Priority importer and Main partner importer – Prenotification
16 SSEK INDONESIAN LEGAL CONSULTANTS
Fiscal Incentives
Type of Incentive Description
Pre-requisites to Obtain
Tax Holiday Minister of Finance Regulation No. 159/PMK.010/2015
a. Tax relief facility (10% - 100% reduction) for a period of 5 – 15 years from the Tax Year of the Commercial Operation Date
b. Extension of tax relief and reduction can be extended by the discretion of MOF considering strategic value of business activity and competitiveness of the national industry
- Pioneer Industry (e.g., basic metal, oil refinery, basic organic chemicals originating from oil and gas, machinery industry producing industrial machines, maritime transportation, IT and Communication, agriculture/forestry/fisheries based processing, etc.);
- Minimum amount of the approved investment plan: 100 million USD (IDR 1 trillion);
- Letter affirming the Commitment to place funds (at least 10% of the total plan of investment) in Indonesian bank(s).
SSEK INDONESIAN LEGAL CONSULTANTS
Fiscal Incentives
Type of Incentive Description Pre-requisites to Obtain
Tax Allowance Government Regulation No. 18/2015
- Reduction in deemed taxable net income in the amount of 30% (thirty percent) of the investment in tangible fixed assets, in installment over 6 (six) years at 5% (five percent) per year;
- Accelerated amortization and depreciation of assets.
- Minimum amount of investment value;
- high absorption of workforce; - high local components; or - certain project location (especially
outside Java island).
17
SSEK INDONESIAN LEGAL CONSULTANTS
Fiscal Incentives
Type of Incentive Description Pre-requisites to Obtain
Import Duty Facility Minister of Finance Regulation No. 76/PMK.011/2012 amending MOF Regulation No. 176/PMK.011/2009
Exemption from import duty on the import of machines, goods and materials for production for a period of 2 years Import duty facility for a period of 4 years is granted to a company using locally-produced machines at least 30% of the total value of machines for its production
a. Eligible business sectors: Production of goods, Tourism, Public Transportation, Mining Port, Telecommunication, Construction, Public Health Services
b. The machines, materials are not produced in Indonesia or produced in Indonesia but do not meet required specification or the quantity of the machines or materials produced in Indonesia is not sufficient
18
SSEK INDONESIAN LEGAL CONSULTANTS
Special Economic Zones (SEZ)
20
a. 8 existing SEZs and 17 planned SEZs; b. Incentives provided for the business entities in SEZ: Tax, Custom and Excise Facilities; Import Duties facilities; Regional Tax and Retribution Facilities; Assistance on the procurement of land; Facilitation of business licensing, immigration and provision of
security; and Exemption from the rule regarding the Business Sectors that are
Conditionally Opened for Foreign Investment .
21 SSEK INDONESIAN LEGAL CONSULTANTS
Issuance of Mining Licenses by BKPM
• MEMR Regulation No. 25 of 2015 regarding Delegation of Authority for Granting of Mineral and Coal Business License in the Framework of One Integrated Licensing System at the BKPM
• MEMR has delegated issuance of the following mining licenses to BKPM: – Exploration License – Operation Production License and its extensions – Trading License and its extensions – Smelter License and its extensions – Principal License for Smelter – Temporary License for transportation and sale – Mining Service License
SSEK INDONESIAN LEGAL CONSULTANTS
Smelter Licenses (MOI v MEMR)
Difference
Smelter licensed by MOI (Ministry of Industry)
Smelter licensed by MEMR (Ministry of Energy and Mineral
Resources) Location Must be located in an industrial estate or
an area zoned for industrial activities, unless due to its raw materials and/or production process, a special location is required (i.e., if the smelter is to be located near the mining area).
Must be located in an area zoned for mining activities.
Minimum amount of investment
Minimum investment (equity and loan): IDR 10 billion and up Minimum equity: IDR 5 billion and up
Minimum investment (equity and loan): IDR 10 billion and up Minimum equity: IDR 5 billion and up
Reporting obligation
Only periodic reports (“LKPM”) to BKPM.
Other than LKPM, there are additional reporting obligations to MEMR: • Annual Work Plan and Budget.
22
• A smelter may be licensed by the Minister of Industry (MOI) or the Minister of Energy and Mineral Resources (MEMR)
• The principal differences are as follows:
SSEK INDONESIAN LEGAL CONSULTANTS
Smelter Licenses (MOI v MEMR) Difference
Smelter licensed by MOI Smelter licensed by MEMR
• Monthly, Quarter and Annual report. • Term sheet/MOU for any mineral sale
agreement.
Term
As long as the smelter company continues in business.
20 years and can be extended, each for maximum 10 years.
Transfer of shares
Does not require recommendation from MOI.
Requires recommendation from MEMR.
Application procedures
Additional requirements: • Ore supply plan and MOU with ore
supplier. • Experts in mining or metallurgy having
at least 3 years experience. • MOU with the refined products
purchaser. • Feasibility study. • Corporate documents and mining
license of ore supplier.
23
24 SSEK INDONESIAN LEGAL CONSULTANTS
Application Process/ Requirements (MOI) No. Licenses/Permits
Issuing Authority Remarks
1. Principal License
BKPM
2. Nuisance Permit
Regional Government Unless located in Industrial Estate
3. Location Permit
Regional Government Unless located in Industrial Estate
4. Building Construction Permit (IMB)
Regional Government
5. AMDAL / UKL-UPL (Environmental Impact Study)
Regional Government
6. Environmental Permit
Regional Government If an AMDAL is required, then an Environmental Permit will also be required.
7. Industrial Business License (IUI)
BKPM
25 SSEK INDONESIAN LEGAL CONSULTANTS
Application Process/ Requirements (MEMR)
No. Licenses/Permits
Issuing Authority Remarks
1. Principal License
BKPM Required documents, among others: - Ore supply plan; - MoU with ore suppliers (mining companies); - Experts having minimum 3 years experience in
mining or metallurgy; and - Bank reference from State-owned bank and/or
national private bank.
2. Nuisance Permit
Regional Government
3. Location Permit
Regional Government
4. Building Construction Permit (IMB)
Regional Government
26 SSEK INDONESIAN LEGAL CONSULTANTS
Application Process/ Requirements (MEMR) No. Licenses/Permits
Issuing Authority
Remarks
5. AMDAL
Governor
6. Environmental Permit
Regional Government
7. IUPOPKPP (MEMR smelter license)
BKPM Required documents, among others: - Cooperation agreement with ore suppliers (mining
companies); - Purchase agreements with buyers of finished product; - Documents evidencing bona fides of ore suppliers
(mining companies), such as evidence of payment of deadrent and royalty, clean and clear certificates, etc.;
- Experts having minimum 3 years experience in mining or metallurgy; and
- Bank reference from State-owned bank and/or national private bank.
27 SSEK INDONESIAN LEGAL CONSULTANTS
Benchmark Pricing
Metal Minerals Non-Metal Minerals and Stone
Calculation Formula Has been stipulated
Has not been stipulated
Benchmark Price Not yet issued
Enforcement Pending issuance of monthly benchmark price
Pricing Reference 1. London Metal Exchange (LME);
2. London Bullion Market Association (LBMA);
3. Asian Metal (AM); and/or 4. Indonesia Commodity &
Derivative Exchange (ICDX)
28 SSEK INDONESIAN LEGAL CONSULTANTS
Benchmark Pricing
* Benchmark Price (HPM) is calculated based on the average mineral price from the 20th day in the second month before a given HPM period up to the 19th day of the month before the HPM period, as published in the relevant price reference (LME, AM, LBMA or ICDX)
Type of Minerals Price Reference*
Nickel
London Metal Exchange (LME) Lead
Bauxite
Copper
Iron Asian Metal (AM) Manganese
Chromium
Gold London Bullion Market Association (LBMA)
Silver
Tin Indonesia Commodity & Derivative Exchange (ICDX)
29 SSEK INDONESIAN LEGAL CONSULTANTS
Benchmark Pricing
• Any sale agreement must first be submitted to MEMR for approval • The mandatory Benchmark Price assumes FOB Mother Vessel • If sold on other terms, the Benchmark Price may be adjusted to
reflect the following costs: o barging o surveyor o transshipment o processing and refinery o insurance
30 SSEK INDONESIAN LEGAL CONSULTANTS
Letter of Credit
• Effective April 1, 2015: o Letter of Credit (L/C) must be used as method of payment for export of
minerals and coal o The L/C must be accepted by Indonesian foreign exchange bank or
Indonesian export finance agency
• Exemption from L/C Requirement: o Existing contracts between the exporter and its foreign buyers using
another method of payment entered into before January 5, 2015; o Statement from the exporter that it is able to change its payment method
to L/C within a certain period of time; and o Statement letter stating the originality of the exporter’s contract and its
ability to change the payment method.
31 SSEK INDONESIAN LEGAL CONSULTANTS
Land Acquisition
Evidence of land ownership: Land certificate issued by National Land Agency (Badan Pertanahan
Negara)
Right to Build (Hak Guna Bangunan or HGB) • HGB title is available to smelter companies • HGB title may exist on State Land • HGB title may be sold, exchanged or otherwise transferred, and may be
encumbered with a Hak Tanggungan (i.e., a land mortgage)
Limitation • HGB title is not available on forest land
32 SSEK INDONESIAN LEGAL CONSULTANTS
Land Acquisition
Adat Rights / Rights in Possession
• Government of Indonesia acknowledges Adat (Indigenous) Community rights over land and also acknowledges rights in possession
• Where land is subject to Adat Community rights and rights in possession, compensation must be paid to acquire or use the land
• Adat Community rights and rights in possession are generally not certificated • Compensation must be paid even though there is no evidence of land
ownership, i.e. no Land Certificate • There is no official registry of Adat Community rights or rights in possession • Land must be acquired by execution of a deed of relinquishment, witnessed
by the Head of District or Notary in role as PPAT (Land Deed Official) • PPAT will then submit a Land Certificate Application to the Local Land Office
33 SSEK INDONESIAN LEGAL CONSULTANTS
Forestry Licensing
No activity is allowed within a forest area, except based on a Borrow-Use permit issued by the Minister of Forestry (MOF)
Type of forest: • Conservation Forest cannot be used for any purpose
– Natural Forest – Peat Land
• Protected Forest can be used for underground mining activities based on Borrow-Use Permit
• Production Forest can be used based for open pit mining and/or smelter activities based on on Borrow-Use Permit
• Non-Forest Land can be used for mining and/or smelter activities based on zoning classification
34 SSEK INDONESIAN LEGAL CONSULTANTS
Forestry Licensing Terms of Borrow-Use Permits for Nickel Smelters: • Principal License
– for 2 years and may be extended • Borrow-Use Permit
– for so long as the underlying license period (MEMR) or – for 20 years (MOI)
Procedures to obtain Borrow-Use Permits: • Technical Consideration from the Head of Provincial Forestry Office • Recommendation from Governor • Technical Consideration from MEMR (for smelter under MEMR) • Review of Application by MOF • Issuance of Principal License • Fulfillment of obligations under Principal License • Issuance of Borrow-Use Permit
35 SSEK INDONESIAN LEGAL CONSULTANTS
Forestry Licensing
Compensation to be paid under the Borrow-Use Permit: • Non-Tax State Revenue
– IDR 1.6 – 3.5 million per hectare • Compensation for trees
– based on benchmark price stipulated by MOF • Reforestation Fund
– USD 12-20 per m3 of wood • Provision of forest resources
– 6-10% of the benchmark price • Land Compensation, only required if the total forest area in the province
for which the Borrow-Use Permit is to be issued is less than 30%.
36 SSEK INDONESIAN LEGAL CONSULTANTS
Local Government Relations and CSR
Company Law and its implementing regulations (i.e. Government Regulation No. 47 of 2012 regarding Social and Environmental Corporate Social Responsibility) • CSR is implemented by the Board of Directors according to the annual
work plan of the Company, after being approved by the General Meeting of Shareholders and the Board of Commissioners
• Realization of budget for the CSR shall be counted as the company’s costs • This obligation is applicable to companies which manage and use natural
resources in their business activities
37 SSEK INDONESIAN LEGAL CONSULTANTS
Local Government Relations and CSR
Mining Law and its implementing regulations • to help the development and empowerment of community affected by
the smelter activities • the community development and empowerment program is to be
incorporated in the annual Work Plan and Budget and approved by MEMR
• there will be administrative sanctions for failure to comply with this obligation
Obligation under Borrow-Use Permit • to empower community surrounding the Borrow-Use Permit area
38 SSEK INDONESIAN LEGAL CONSULTANTS
Minimum Refinery/Processing Level No. Commodity Processing
and/or Refinery
Product Quality Ore Mineral
1. Copper (smelting process)
a. Chalcopyrite b. Digenite c. Bornite d. Cuprite e. Covelite
Processing Copper Concentrate ≥ 15% Cu
Refinery a. Copper cathode Metal Cu ≥ 99%
b. Anode mud
a. Metal Au ≥ 99%; b. Metal Ag ≥ 99%; c. Bullion Pb ≥ 90%; d. Metal Pd ≥ 99%; e. Metal Pt ≥ 99%; f. Metal Se ≥ 99%; g. Metal Te ≥ 99%; h. TeO2 ≥ 98%; i. Te(OH)4 ≥ 98%; j. PbO ≥ 98%; k. PbO2≥ 98%; l. SeO2 > 98%; and/or m. Rare metal and rare earth (refer to the
requirement for rare earth metal in tin).
c. Telluride Copper a. Metal Cu ≥ 99%; b. Metal Te ≥ 99%; c. TeO2 ≥ 98%; d. Te(OH)4 ≥ 98%; and/or e. Metal alloys of Telurid copper ≥ 20% Te
39 SSEK INDONESIAN LEGAL CONSULTANTS
Minimum Refinery/Processing Level
No. Commodity Processing and/or
Refinery Product Minimum Limit Ore Mineral
Copper (leaching process)
a. Chalcopyrite b. Digenite c. Bornite d. Cuprite e. Covelite
Refinery Metal a. Metal Cu ≥ 99%; b. Metal Au ≥ 99%; c. Metal Ag ≥ 99%; d. Metal Pd ≥ 99%; e. Metal Pt ≥ 99%; f. Metal Se ≥ 99%; g. Metal Te ≥ 99%; h. TeO2 ≥ 98%; i. Te(OH)4 ≥ 98%; and/or j. Rare metals and rare earth
(refer to the requirement for rare earth metal in tin).
40 SSEK INDONESIAN LEGAL CONSULTANTS
Minimum Refinery/Processing Level No. Commodity Processing
and/or Refinery
Product Minimum Limit Ore Mineral
2. Nickel and/or cobalt (smelting process) a. Saprolite b. Limonite
a. Pentlandite b. Garnierit c. Serpenti-nite d. Karolite
Refinery Matte nickel, metal alloys and nickel metal
a. Ni Mate ≥70% Ni; b. FeNi ≥ 10%Ni; c. Nickel Pig Iron (NPI) ≥ 4% Ni; d. Metal Ni ≥ 93%; and/or e. NiO > 70% Ni.
Nickel and/or cobalt (leaching process) limonite
Metal, oxide metal, sulfide metal, mix hydroxide/sulfide precipitate, and hydroxide nickel carbonate
a. Metal Ni ≥ 93%; b. Mix Hydroxide Precipitate
(MHP) > 25% Ni; c. Mix Sulfide Precipitate (MSP) ≥
45% Ni; d. Hydroxide Nickel Carbonate
(HNC) ≥ 40% Ni; e. NiS ≥ 40% Ni and/or; f. Metal Co > 93% g. CoS ≥ 40% Co; h. Metal Cr ≥ 99%; and/or i. Cr2O3 ≥ 40%.
Nickel and/or cobalt (reduction process) a. Saprolite b. Limonite
Refinery Metal alloys a. FeNispon (Sponge FeNi) ≥ 4% Ni;
b. Luppen FeNi ≥ 4% Ni; and/or c. Nuget FeNi ≥ 4% Ni.
41 SSEK INDONESIAN LEGAL CONSULTANTS
Minimum Refinery/Processing Level
No. Commodity Processing and/or Refinery
Product Minimum Limit Ore Mineral
3. Bauxite a. Gibbsite b. Diaspore c. Boehmite
Refinery Oxide Metal/ Hydroxide and Metal
a. Smelter grade alumina ≥ 98% Al2O3;
b. Chemical Grade Alumina ≥ 90% Al2O3 ≥ 90% Al(OH)3;
c. Alumina Hydrate ≥ 90% Al(OH)3 ;
d. Proppant: 1) Al2O3 ≥ 70%
(granulated); 2) may crack in 7,500 psi
pressure, fraction size: 20+40 mesh ≤ 5.2% 30+50 mesh ≤ 2.5% 40+70 mesh ≤ 2.0% 3) Apparent Specific
Gravity (ASG) 3.15 e. Metal Al ≥ 99%.
42 SSEK INDONESIAN LEGAL CONSULTANTS
Minimum Refinery/Processing Level
No. Commodity Processing and/or Refinery
Product Minimum Limit Ore Mineral
4. Iron
a. Hematite b. Magnetite
Processing
Iron Concentrate ≥ 62% Fe and ≤ 1% TiO2
Goethite/ laterite Processing Laterite iron concentrate
≥ 51% Fe and Content (Al2O3 + SiO2) > 10%
Refinery Sponge, metal and metal alloys
a. Sponge iron ≥ 75% Fe; b. Pig iron ≥ 90% Fe; and/or c. Ferro alloys ≥ 83% Fe.
Lamela magnetite – ilmenite (iron sand)
Processing Iron Sand Concentrate
≥ 58% Fe and 1% ≤ TiO2 ≤ 25%
Iron Sand Concentrate Pellets
≥ 56% Fe and 1% ≤ TiO2 ≤ 25%
Ilmenite Concentrate ≥ 50% TiO2
43 SSEK INDONESIAN LEGAL CONSULTANTS
Minimum Refinery/Processing Level No. Commodity Processing
and/or Refinery Product Minimum Limit Ore Mineral
Refinery Metal a. Sponge iron ≥ 75% Fe; and/or
b. Pig iron ≥ 90% Fe. Slag a. TiO2 ≥ 85%;
b. TiCl4 ≥ 98%; c. Metal alloys ≥ 65% Ti; d. V2O5≥ 90%; e. Vanadium metal alloys ≥
65% V; and/or f. Rare metal and rare earth
(refer to the requirement for rare earth metal in tin).
Oxide Metal, Chloride Metal and Metal Alloys
a. Synthethic TiO2 ≥ 85%; b. TiCl4 ≥ 87%; c. Metal alloys ≥ 65% Ti;
and/or d. Titanium metal alloys ≥
65% Ti. Slag Refer to the requirement for
slag in iron sand concentrate
44 SSEK INDONESIAN LEGAL CONSULTANTS
Minimum Refinery/Processing Level No. Commodity Processing
and/or Refinery Product Minimum Limit Ore Mineral
5. Tin Cassiterite Processing Zircon concentrate Refer to the requirement for zirconium and zircon
Ilmenite concentrate Refer to the requirement for ilmenite in iron ore
Rutile concentrate TiO2 ≥ 90%
Monazite and xenotime concentrate
-
Refinery Metal Metal Sn ≥ 99.90%
Slag
a. Metal W ≥ 90%; b. Ta2O5 ≥ 90%; c. Nb2O5 ≥ 90%; and/or d. Sb2O3 ≥ 90%.
Chloride metal and metal alloys
a. TiCl4 ≥ 98%; and/or b. Titanium metal alloys ≥ 65%.
Oxide metal, hydroxide metal and rare earth metal
a. Rare earth oxide metal (REO) ≥ 99%;
b. Rare earth hydroxide metal (REOH) ≥ 99%; and/or
c. Rare earth metal > 99%.
45 SSEK INDONESIAN LEGAL CONSULTANTS
Minimum Refinery/Processing Level
No. Commodity Processing
and/or Refinery Product Minimum Limit Ore Mineral
6. Manganese a. Pyrolusite b. Psilomelane c. Braunite d. Manganite
Processing Manganese concentrate
≥ 49% Mn
Refinery Metal, metal alloys and manganese chemical
a. Ferro Manganese (FeMn), Mn ≥ 60 %; b. Silica Manganese (SiMn), Mn ≥ 60%; c. Manganese Mono-oxide (MnO), Mn ≥
47.5%, MnO2 ≤ 4%; d. Manganese Sulfate (MnSO4) ≥ 90%; e. Manganese Chloride (MnCl2) ≥ 90%; f. Synthetic Manganese Carbonate (MnCO3)
≥ 90%; g. Kalium Permanganat (KMnO4) ≥ 90%; h. Manganese Oxide (Mn3O4) ≥ 90%; i. Synthetic Manganese Dioxide (MnO2) ≥
98%; and/or j. Direct Reduced Manganese Mn≥49%,
MnO2 ≤ 4%.
46 SSEK INDONESIAN LEGAL CONSULTANTS
Minimum Refinery/Processing Level No. Commodity Processing
and/or Refinery Product Minimum Limit Ore Mineral
7. Lead dan Zinc
a. Galena b. Sphalerite c. Smithsonite d. Hemimor-
phite (calamide)
Processing Zinc concentrate ≥ 52% Zn Lead concentrate ≥ 57% Pb
Refinery Metal, metal oxide/hidroxide
a. Bullion ≥ 90% Pb; b. ZnO ≥ 98%; c. ZnO2 ≥ 98%; d. Zn(OH)2≥98%; e. Bullion ≥ 90% Pb; f. PbO ≥ 98%; g. Pb(OH)2 ≥ 98%; and/or h. PbO2 ≥ 98%.
Gold and/or silver metal a. Metal Au ≥ 99% and/or b. Metal Ag ≥ 99%
8. Gold a. Native b. Associated
minerals
Refinery Gold metal
Metal Au ≥ 99%
9. Silver a. Native b. Associated
minerals
Refinery Silver metal Metal Ag ≥ 99%
10. Chromium Chromite Refinery Metal and metal alloys a. Metal Cr ≥ 99%; and/or b. Chromium metal alloys ≥ 60% Cr.
47 SSEK INDONESIAN LEGAL CONSULTANTS
Minimum Refinery/Processing Level No. Commodity Processing
and/or Refinery Product Minimum Limit Ore Mineral
12. Zirconium Processing Ilmenite Refer to the requirement for ilmenite in iron sand
Rutile Refer to the requirement for rutile in tin Refinery a. Zircon chemical
material; b. Zircon sponge; c. Zirconia; d. Zircon metal; and e. Hafmium .
a. Zirconium Oxychloride (ZOC) ZrOCI2.8H2O > 90%;
b. Zirconium Sulfide (ZOS) Zr(SO4)2.4H2O > 90% ;
c. Zirconium Based Sulfide (ZBS) Zr5O8 (SO4)2.xH2O > 90%; d. Zirconium Based Carbonate (ZBC)
ZrOCO3.xH2O > 90%; e. Amonium Zirconium Carbonate(AZC)
(NH4)3ZrOH(CO3)3 .2H2O > 90%; f. Zirconium Acetate (ZAC)
H2ZrO2(C2H3O2)2 > 90%; g. Kalium Hexafluoro Zirconate (KFZ)
K2ZrF6 > 90%; h. Zirconium Sponge > 85% Zr; i. Zirconia (ZrO2+HfO2) > 99%; j. Zirconium > 95% Zr; and/or k. Hafnium > 95% Hf.
13. Antimone Stibnite Antimone metal a. Sb > 99%; and/or b. Sb2O5 > 95%.
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