Controversial mining bill likely to be passed

The Jakarta Post , Jakarta | Fri, 02/23/2007 8:54 AM | Business

Ika Krismantari, The Jakarta Post, Jakarta

The hopes of mining firms for major changes to the draft mining law appear to have been dashed after the House of Representatives decided to keep a number of controversial chapter unchanged.

Simon Sembiring, the Energy and Mineral Resources Ministry's director general of geothermal energy, minerals and coal, said Thursday in Jakarta that almost 90 percent of the provisions in the mining bill had been approved, including those relating to licensing procedures, which have been strongly opposed by the country's mining firms.

""We are now in the process of discussing additional provisions for the transition period for existing mining license holders to bring themselves into line with the proposed law,"" he told The Jakarta Post on the sidelines of a meeting of the House working committee charged with deliberating the bill.

Provided there were no further hitches, he said he hoped the House would pass the bill into law in March as scheduled.

Mining firms have been up in arms against the bill's licensing provisions, which envisage the delegation of licensing powers from the ministry to regional administrations, and want to see the government retaining the existing contract of work mechanism.

They argue that the current contractual arrangements, which cover all matters concerning operating requirements, taxes, royalties and the sale of stakes to local interests, offer greater legal certainty for mining companies.

Indonesian Mining Association (IMA) chairman Arif S. Siregar said that investors were worried that if local authorities were given the power to issue permits, they would also be able to revoke them at any time due to the fact that the proposed licensing system lacked teeth.

Meanwhile, regarding the requirement in the bill for mining companies to undertake the processing of ore in Indonesia, Arif said the House committee had also decided to keep this unchanged.

Responding to the miners' complaints about the expense involved in establishing processing facilities, Simon said that investors could set up consortia to develop smelters and processing plants if they were unable to do so on their own.

Meanwhile, the chairman of the working committee, Sony Keraf, said the House had decided to stick with the licensing regime contained in the bill, even though the Golkar Party had suggested providing special contractual arrangements for big investment projects in remote areas.

""This is for the sake of the Indonesia people. If they don't like it, they can leave it. This is a country that's rich in natural resources. I'm sure they will come back. Look what happened in Bolivia. When they imposed the new licensing scheme, the investors were back again within six months,"" Sony said defiantly, despite the dramatic fall in mining-sector investment in Indonesia over recent years, mostly as the result of a lack of legal certainty.

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