Renegotiation results to be announced soon
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The government will announce preliminary results of contract renegotiations with mining companies next week.
Energy and Mineral Resources Minister Jero Wacik said in Jakarta on Thursday that the announcement would not include the outcome of the renegotiations with large mining contractors such as PT Freeport Indonesia, PT Newmont Nusa Tenggara and PT Vale Indonesia.
“For such big companies, the renegotiation process takes longer. We hope it can be completed in 2013,” he said.
Jero said that the renegotiations with mining companies had taken place since early this year as part of the government’s plan to bring all existing mining policies in line with the new mining law.
The renegotiations cover six main issues, including the increase in royalty payments, the obligation to process mineral ores in Indonesia, the use of local goods and services, divestment, contract extensions and the size of mining areas.
The government formed its renegotiation team early in January this year, appointing Coordinating Economic Minister Hatta Rajasa as the team’s chairman.
Hatta previously said that the government hoped to complete all renegotiations this year, as the team’s working period would end in 2013.
Separately, the team’s secretary, Thamrin Sihite, who also serves as the director of coal and minerals at the Energy and Mineral Resources Ministry, said that the process of contract renegotiations with a number of mining companies had been completed.
He said that contracts with five companies involved in gold, nickel, cooper and bauxite mining and 60 companies in coal mining had successfully been renegotiated, adding that amendments would be signed soon.
“But I won’t mention the names of the companies yet. Let it be a surprise in the near future,” he said at his office recently. Thamrin added that he would also talk with Finance Minister Agus Martowardojo in order to speed up the implementation of taxation regulations for the new contracts.
The director of Indonesian Resources Studies (IRESS), Marwan Batubara, said the government needed to ensure that existing foreign mining companies complied with the divestment policy as stipulated in the 2009 Mineral and Coal Mining Law.
“The important thing is to ensure the process of divestment continues,” he said, adding that foreign miners could hold an initial public offering (IPO) to meet the divestment obligation. “But, state firms and those owned by local governments should be given priority in any share purchase.”