T

he government has ensured that the establishment of North Kalimantan as a new province will not affect the local mining companies operating in regencies formerly under the East Kalimantan administration.

Deputy Energy and Mineral Resources Minister Rudi Rubiandini said that local mining businesses in Bulangan, Malinau, Nunukan, Tana Tidung and Tarakan regencies, which were previously part of East Kalimantan province, would not, for example, have to apply for new permits.

The five regencies will be carved out of East Kalimantan to become part of North Kalimantan now that the House of Representatives and the government have officially endorsed the establishment of North Kalimantan as the nation’s 34th province.

“The local administrations that previously held the mining permits [IUPs] for small-scale mining businesses must promptly hand over the documents to the new administration so the latter can publish new certificates,” Rudi said.

“The mining businesses will only have to reregister themselves to the North Kalimantan provincial administration for administrative purposes.”

Larger mining companies operating under contracts of work agreements with the central government would not have to register with the new regional administration, the deputy minister said.

He added that alterations in relation to the establishment of North Kalimantan province would merely pertain to revenue on sharing funds and tax revenue from the mining companies, not to the their business permits.   

North Kalimantan will border with the Malaysian states of Sabah and Serawak to the north and west, respectively; the Makassar Strait and the Sulawesi Sea to the east, and Berau, East Kutai, Kutai Kertanegara and West Kutai regencies in East Kalimantan to the south.  

The new province, which is rich in oil, gas and coal, will have Tanjung Selor as its capital and will span a total area of 71,176.72 square kilometers with around 622,350 residents. Its regencies will comprise Bulungan, Malinau, Nunukan, Tana Tidung and Tarakan.

Currently, 15 coal mining companies operate in Tana Tidung, whose concession areas spanned 37,708 hectares as of 2009, according to data from the local administration. In Nunukan, at least 13 mining companies are exploring coal potential in the region.

In Malinau, previously the largest regency in East Kalimantan accounting for 17.12 percent of the province’s total 245,237.8 square kilometers, three major coal companies — Bara Dinamika Muda Sukses, Mitra Bara Adi Perdana and Kayan Putra Utama Coal — operate.

The three companies produced in 2010 a combined total of 1.89 million tons of coal, valued at US$133.92 million, according to Malinau administration data.

Separately, Indonesian Mining Association (IMA) executive director Syahrir Abubakar said the government should strengthen its presence in North Kalimantan to oversee the new provincial administration establish its mining policy over the next 12 months.

“The government must strengthen its control in the management of the mining industry in the regions. For too long, the government has given local administrations too much freedom, which has resulted in overlapping land rights,” he said.

The issue of unbridled, overlapping land rights prompted the government to introduce a new requirement obliging mining companies to obtain clean and clear status certificates from the government, which will be a prerequisite to obtain IUPs.

Clean and clear status indicates that a company’s activities are in line with the government’s environmental policies, that it is free of overlapping land rights, and conforms with all tax and non-tax financial obligations.