Thu May 3, 2012 8:00am EDT
By Fergus Jensen
JAKARTA May 3 (Reuters) - Indonesia's government will impose an average 20 percent duty on 14 mineral ore exports including copper, gold and nickel from Sunday, slightly lower than expected but enough to hurt miners in one of the world's major metals exporters.
The tax, which officials said a month ago could be as high as 25 percent, is designed to increase revenues from a mining sector that makes up about 12 percent of Southeast Asia's biggest economy. It follows similar duties for palm oil.
The export duties will not apply to coal, which will be ruled on separately, said mining minister Jero Wacik on Thursday, leaving open the possibility of a future tax on shipments from the world's largest thermal coal exporter.
Currently there are no export taxes on metal ores, said an executive at state nickel and gold miner PT Aneka Tambang , though some miners have to pay low single-digit royalty charges, so the new duties are likely to be a major hit to miners' profits.
"The government wants to kill a mouse in a rice field, but they're burning the whole field," said Tjahyono Imawan, president of the Indonesian Mining Services Association.
The government wants to push miners to process raw ores domestically and export higher-value finished metals. The duty will also be applied to tin, silver, lead, zinc, chromium, platinum, bauxite, iron ore and manganese.
Raw tin ore exports have already been banned, however, and so the tax on raw minerals should not affect miners such as PT Timah in the world's largest exporter of tin. Tin miners have already built smelters and export refined tin.
"There will be a push to make smelters," Wacik said, adding that miners would not be allowed to export raw ores after May 6 without paying the tax.
Indonesia is home to Freeport McMoRan Copper & Gold Inc's Grasberg mine, with the world's largest gold reserves and second-biggest copper reserves, as well as major metals mines run by Newmont Corp and Vale Indonesia.
Miners such as Freeport previously said they were protected from tax changes by long-standing contract-of-work agreements, while the government has said it will negotiate contracts ahead of a planned curb on all raw metal exports by 2014.
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