Make Sure To Fine The Suspension Of Smelter Development, Minister Of Energy And Mineral Resources: There Is A Formula

President Joko Widodo witnessed the construction project of a copper foil factory owned by PT Hailiang Nova Material Indonesia which was established in Gresik Regency, East Java Province, Tuesday, June 20, 2023. (Doc. ESDM)

JAKARTA - The Ministry of Energy and Mineral Resources (ESDM) has confirmed that it will provide administrative fines for the delay in the construction of domestic metal mineral refining facilities for 5 companies that have received export relaxation.

The five companies consist of PT Freeport Indonesia (PTFI) and PT Amman Mineral Nusa Tenggara for copper commodities, PT Sebuku Iron Lateritic Ores for iron commodities, and two smelters belonging to PT Kapuas Prima Coal, namely PT Kapuas Prima Cita for lead and PT Kobar Lamandau Mineral for zinc.

Minister of Energy and Mineral Resources Arifin Tasrif said that his party was currently formulating and the amount of fines given to the purification company.

"It's still being compiled. There is already a formula," said Arifin, quoted on Saturday, June 24.

Later, the five companies will be required to pay a fine no later than 60 days after the Decree of the Minister of Energy and Mineral Resources Number 89 of 2023 takes effect from May 16, 2023.

Arifin explained that the imposition of this administrative fine was based on delays in the construction of a smelter of 20 percent of the cumulative value of sales abroad for each delay period.

"There is a formula and then we will convey it later," said Arifin.

Previously in the Hearing Meeting with Commission VII DPR RI Arifin explained that the imposition of sanctions for delaying the purification facility referred to the Decree of the Minister of Energy and Mineral Resources Number 89 of 2023 concerning Guidelines for the Imposition of Administrative Fines for the Suspension of the Construction of Metal Mineral Purification Facilities in the Country.

"First sanction, placement of seriousness guarantees of 5 percent of total sales in the period 16 October 2019 to 11 January 2022 in the form of joint accounts (Escrow accounts)," explained Arifin.

Then second, the imposition of administrative fines for delays in purification facilities by 20 percent of the cumulative value of sales abroad for each delay period taking into account the impact of the COVID-19 pandemic.

Third, IUP or IUPK holders who export the extension period will be subject to a fine further regulated by the Ministry of Finance.

The following, administrative fines take into account the activities affected by the pandemic based on the Independent Verificator report, with the following formulation:

Fines = (90 percent - A - B) / 90 percent) x 20 percent x CA = the cumulative percentage of physical progress according to verification

B = The total weight affected by Covid-19 according to the verification results

C = cumulative value of sales abroad during the development period.