Minister’s status will not affect mining talks

JAKARTA. The Corruption Eradication Commission’s (KPK) decision to name Energy and Mineral Resources Minister Jero Wacik a suspect in a graft case will not affect the ongoing renegotiations of mining contracts with major mining firms, a senior ministry official has assured.

The Energy and Mineral Resources Ministry’s minerals and coal director general, R. Sukhyar, said on Wednesday that the renegotiations with the mining companies would continue despite the alleged involvement of the minister in corruption case.

He said that the current process of sealing memorandums of understanding (MoUs) with mining firms — an important step before the amendment of contracts of work (CoWs) — would not be affected by the minister’s situation.

The government is currently working to adjust numerous mineral CoWs as well as coal contracts of work (CCoW) to regulations under the 2009 Mining Law.

The KPK has named Jero a suspect in a case involving extortion and kickbacks worth about Rp 9.9 billion (US$840,979).

Law expert Hikmahanto Juwana said the naming of Jero as a graft suspect would not affect the renegotiations. “I don’t see that anything is flawed in the process. The minister is only a component in the team and this renegotiation has nothing to do with the corruption case,” he said.

KPK commissioner Zulkarnaen said on Wednesday that the agency had raised Jero’s legal status from a witness to a suspect.

Despite the new status, the ministry would try to perform its activities as usual, according to deputy Energy and Mineral Resources Minister Susilo Siswoutomo.

“All activities at the Energy and Mineral Resources Ministry should not be disrupted. All [high-ranking officials] will continue activities that must be performed, so the ministry won’t be disrupted,” Susilo said.

Although the 2009 Mining Law mandates that renegotiation of CoWs and CCoWs should be concluded within one year after the law was passed, complex issues have stalled progress, particularly with big players.

Copper giant PT Freeport Indonesia — a subsidiary of US-based Freeport McMoRan Copper & Gold Inc. — recently signed an MoU and is now working to detail the agreed principles in a CoW amendment.

Another copper digger, PT Newmont Nusa Tenggara, is still working to conclude an MoU so that the company can resume its exports, which have been stalled for months.

The signing of Newmont’s MoU was scheduled for Wednesday but was delayed as the mining giant had not given a response to the insertion of an additional article in the MoU.

Sukhyar said the government proposed inserting an additional article that would ensure Newmont’s commitment to domestic mineral refining.

“A cooperation to develop a smelter is allowed. However, when the partner faces hurdles or the project fails, it doesn’t mean that Newmont’s obligation for mineral refining vanishes. The 2009 Mining Law says that the holder of a contract of work is obliged to perform the refining process,” Sukhyar said.

As part of attempts to comply with the 2009 Mining Law, Newmont, a subsidiary of Denver-based Newmont Mining Corp., is planning to supply its concentrate for processing to a smelter that will be developed by fellow copper digging giant PT Freeport Indonesia.

Under the Mining Law, minerals must be processed into value-added products before they can be exported overseas. Therefore, mining firms are required to build refineries or smelters in the country either independently or in joint projects with other firms.

Newmont president director Martiono Hadianto said his company had informed its parent firm about the government’s proposal.

The company is scheduled to sign the MoU on Thursday, according to a ministry official. (Raras Cahyafitri)