SYDNEY (Yosefardi) – Indo Mines Ltd considers there is limited opportunity to expand iron concentrate production ahead of any pig iron production and is committed to pursuing downstream processing and the installation of pig iron facilities.
As a result, an expansion of the iron concentrate facilities would only be pursued if it is profitable to do so and the Group continues to investigate options for the domestic sales of iron concentrate.
On 11 January 2014, the Government of Indonesia released a series of regulations related to the ban on the export of unprocessed minerals.
There is a reprieve for producers of certain types of mineral concentrates (including iron concentrate) until January 2017 and comes with the requirements to show a commitment to building refining facilities as well as an obligation to pay export duty ranging from 20% to 60% of export revenues.
During the half year, the Group has worked towards implementing the pig iron project development strategy. This has included re-submission of the Feasibility Study to the Indonesian Ministry of Mines seeking approval for the amended site location for which a pproval is expected shortly.
The Group successfully concluded agreements for the acquisition of 160.7 hectares of land for US$10.8 million at the western end of the Contract of Work area, which establishes the location of the permanent iron making plant and associated infrastructure.
The intent remains to implement the pig iron project through the phased construction of a 500,000 tonne concentrate plant leading into pig iron production through the installation of the single Mesto Vertical grinding unit that has been purchased.
In the context of Government Regulation 7/2012 and the export tax provisions announced on 11 January 2014, the Board considers that there is no opportunity for the export of concentrate ahead of pig iron production. However, PT Jogja Magasa Iron, a 70% owned subsidiary of the Company, continues to investigate options for the domestic sale of concentrate in the meantime.