Govt concludes renegotiations with 25 miners

JAKARTA. The government has completed the renegotiation of mining contracts with 25 companies, and says that many more miners are expected to sign the contract agreements soon. 

“The 25 mining companies are holders of coal mining licenses [PKP2B] and non-coal contracts of work [CoWs],” Energy and Mineral Resources Minister Jero Wacik said on Thursday, refusing to disclose the names of the firms or details on the numbers of CoWs and PKP2B holders.

Jero confirmed, however, that mining giants PT Freeport Indonesia, PT Newmont Nusa Tenggara (NNT) and PT Vale Indonesia were not on the list of the 25 companies.

“All the 25 companies will sign the new contracts with the government tomorrow [Friday] and we expect that other companies will gradually follow,” Jero said, adding that there are currently 112 PKP2B and CoW holders operating in the country with various sizes of businesses.

The minister said that, under the amended contracts, the 25 firms had to carry out six agreed points, which were related to the size of mining areas, contract extensions, amounts of royalties to be paid, the obligation to process raw materials in Indonesia, divestment and the utilization of local goods and services.

“I can’t yet elaborate on details of the agreed points, but one of them is about limitations of land use,” he said.

“We have found that some mining firms acquire very large plots of land, but they don’t utilize all [of them],” he added.

The limitation on the size of mining areas has proven to be one of the toughest issues in the renegotiation process.

Vale Indonesia, for example, has the right to develop 190,150 hectares of land in Sulawesi under its current CoW. The 2009 Mining Law, however, stipulates that a metal miner is only allowed to utilize 100,000 hectares of land.

During the renegotiations, the government also asked miners to build smelters to process their ore products.

“We want to be very consistent with our policy of giving added value to our mineral products,” Coordinating Economic Minister Hatta Rajasa said at the event.

The 2009 Mining Law bans the export of raw mineral products and only allows mining companies to export processed ores.

Hatta said that the government aimed to have the remaining 87 companies sign similar agreements in the near future.

However, the goal may not be realized as the renegotiations are progressing slowly and the agreements reached so far have involved small-sized mining companies.

Under the 2009 Mining Law, all renegotiations involving the holders of CoWs and PKP2B should have been completed a year after the law was enacted. The government formed a renegotiation team in January 2012 to accelerate the process.

The team recorded that only a small number of firms had agreed with the government’s proposed points. 

Last year, the government concluded renegotiations with five companies, namely PT Mindoro Tiris Emas, PT Irama Mutiara Mining, PT Iriana Mutiara Indeburg, PT Woyla Aceh Minerals and PT Karimun Granite.

In 2012, the government concluded renegotiations with two firms, PT Tambang Mas Sable and PT Tambang Mas Sangihe, bringing the total number of firms to seven last year. (koi)