Regulation of the Minister of Energy and Mineral Resources No. 1 of 2014 (hereinafter referred to as ‘Regulation 1/2014’) contains provisions concerning the upgrading of added value of minerals through mineral processing and refinery. In order to implement the provision of Article 96 and Article 112 C point 5 of Government Regulation No. 23/2010 (latest amendment 2014) regarding the Executing of Mineral and Coal Mining business activities, it is necessary to stipulate Regulation 1/2014. The Regulation comes into force as from the date of promulgation, which is 11 January 2014.

General

There are several types of minerals: metal mineral, non-metal mineral, and rocks. Added value means an addition to the value of minerals as a result of the mineral processing and/or refinery. The upgrading of added value means the increase in the value of minerals through the processing and/or refinery and will have the result of economic, social, and cultural benefits.

Procedures for upgrading added value of minerals

The processing and/or refinery of minerals shall be executed on the basis of considerations:

a. Having ore resources and reserves in a large quantity

b. Driving up metal production capacity in the country

c. Processing and/or refinery technology already in the proven phase

d. End product of the processing and/or refinery as raw material of industry for the domestic need

e. By product constituting rest of the processing and/or refinery production for raw material of domestic chemical and fertilizer industry

f. As raw material of domestic mineral-based strategic industry

g. Contributing multiplier effects to the state economically and socially and culturally

h. Increasing state revenue

The processing takes place in the country in accordance with the minimum content of the processing as contained in the Attachment of the Regulation.

The upgrading of added value

IUP of Production Operation is a business license granted for the completion of IUP of Exploration to execute the phase of production operation activity. Besides IUP of Production Operation, there is IUPK of Production Operation with regards to special mining business license area. Holders of IUP(K) of Production Operation for metal mineral, non-metal mineral and rock are obliged to process their mining production in the country in accordance with the minimum content of the processing of the specified mineral. The processing and/or refinery may be executed directly or through cooperation with other holders of IUP. In some cases of joint cooperation, approval is needed from the Minister.

Obligation of holders of IUP, IUPK and special IUP

Holders of IUP or IUPK for copper production operation are obliged to fulfill the minimum content of the purification of metal minerals as contained in Attachment I of Regulation 1/2014. The same applies for lead, zinc, iron sand, and tin.

By Regulation 1/2014, Regulation 7/2012 on the upgrading of added value of minerals through mineral processing and refinery (already amended twice) and Regulation 20/2014 are revoked