A smelter is a mining processing plant that raises the concentration of metals such as nickel, tin, copper, gold, and silver to the level required for raw materials in the finished product. The technique comprises removing contaminants from metal minerals. The name smelter is derived from the process of smelting. Smelting is the extraction of pure metal ore from the earth.
In Indonesia, smelters are required for coal ore mining firms. The rule refers to Law Number 4 Year 2009 on Mineral and Coal Mining, which mandates that metal mineral mining businesses construct smelters to enhance mineral ore processing.
The presence of smelters can boost economic growth in the area and entice domestic and foreign investors to invest in developing regional potential. This has a positive effect on regional and national economic development.
In addition to the benefits of smelters, we will look at how these facilities can be developed and operated effectively. This is intrinsically related to the rules established by the government, specifically the Ministry of Energy and Mineral Resources (ESDM).
Regulated in Law Number 4 Year 2009 Article 35 Mining operations are carried out in the form of a Mining Operation Permit (IUP), which is further mentioned in Article 36 is a Production Operation Permit (IUP OPK), which includes construction, mining, processing and refining, as well as transportation and sales activities, that business entities wishing to establish smelting facilities must contain the following provisions:
- Company name
- Territory
- Mine location
- Processing and refining sites
- Transport and distribution
- Investment capital
- Duration of the IUP
- Period of activity stage
- Settlement of land issues
- Environment, including reclamation and post-mining
- Reclamation and post-mining guarantee funds
- Extension of the IUP
- Rights and obligations of IUP holders
- etc.
Then, other things that the company must do to obtain IUP OPK are
- Attach a letter of application for submission of processing and refining IUP OPK
- Complete the information in the Processing and Refining IUP OPK Submission Form.
- Complete the checklist of documents for the application for processing and refining IUP OPK.
Meanwhile, the documents that must be attached and the licences that must be owned in the application for IUP OPK mineral processing and refining are
- Company profile including
- Deed of foundation and amendment of the mining and trading company (processing of the intended mineral raw material), composition of the company’s board of directors, shareholders.
- Taxpayer identification number (NPWP).
- SIUP
- Domicile letter
- Company Registration Certificate
- Ratification of the Certificate of Incorporation by the competent authority.
- Memorandum of Understanding (MoU) / Sale and Purchase Agreement (SPA) between the applicant for a Special Production Operation IUP and the holder of a valid Production Operation IUP.
- MoU / SPA / Purchase Order between the applicant for a Special Production Operation IUP and the buyer (end user) that is still valid.
- Production IUP legality SK IUP production operations that have been integrated in the Directorate General of Mineral and Coal / Clean and Clear (CNC) are attached.
- Technical data of the mine owner/IUP of the production operation (reserves/resources-production capacity), Amdal approval letter or FS/Feasibility Study.
- Financial report of the company holding the production IUP.
- Industrial License/Factory Establishment License
- Financial statements of the company for the last 3 years
- Work plan and budget report (RKAB) for the last year
- Approval of Environmental Impact Analysis (AMDAL) or Environmental Management Efforts (UPL) and Environmental Monitoring Efforts (UKL)
- Approval of Factory Feasibility Study prepared by local officials
- List of experts
Furthermore, as a consequence of the issuance of the Mining Operation Permit (IUP), it is necessary to carry out supervision so that the IUP holder is more directed in carrying out activities related to the mining operation so as not to deviate from the orders and prohibitions set forth in the permit.
Advantages of the smelter
There are several advantages obtained with the smelter, namely
- Building a smelter in the mining area is more profitable than building it abroad, as the costs are much lower.
- Building smelters in the country can also create more employment opportunities.
- The refining process gives mining products a higher selling value.
- Attract domestic and international investors to provide higher investment value
- Support downstream development in Indonesia
Therefore, Market Entry Indonesia is here to provide the process of obtaining permits for the manufacture of mining equipment, which has more than 5 years of experience in assisting overseas investors or companies around the world in the licensing and legalisation process to Indonesia.