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tate-owned tin miner PT Timah has obtained a principal agreement to hold a majority stake in a joint venture to be established with local administrations to run mining area previously operated PT Koba Tin.

Timah corporate secretary Agung Nugroho said on Friday that the company had already carried out discussions with local administrations on the joint venture.

'€œWe already have the agreement. The remaining stake will be determined based on the area covered by the administrations,'€ Agung said on Friday.

The local administrations, which will partly owned the joint venture, are Bangka-Belitung province, South Bangka regency and Central Bangka regency administrations.

'€œWe hope the joint venture will be in operation by next January. However, it will depend on the issuance of a special mining license (IUPK). We hope it will be issued quickly as we have to calm the employees,'€ Agung said.

He added that employees '€” after settling their rights with Koba Tin '€” would be able to work in the new joint venture.

The government earlier announced that it had terminated the contract of work (CoW) of Koba Tin, which is 75 percent owned by Malaysia Smelting Corporation (MSC). The Malaysian firm opposed the termination and threatened to bring the case to an international arbitrage.

Following the termination of the contract, Koba Tin'€™s mining site is now considered state-owned property. The government has asked Timah, which holds a 25 percent stake in Koba Tin, to keep the assets but has forbidden it from carrying out production activities until the permit is issued.

'€œTimah has experience [in tin mining]. However, it has been asked to cooperate with the local administrations and the police to secure the asset until the license is issued,'€ the Energy and Mineral Resources Ministry'€™s director general for coal and minerals, Thamrin Sihite, said on Thursday.

He added that the license would be issued after Timah and the local administrations reached an agreement about managing the mining site.

'€œThey are in talks to determine the ownership structure. After it is established, we [the ministry] will provide the license,'€ Thamrin said. Koba Tin had a CoW for a 41,300-hectare mining site on Bangka Island. The contract was obtained in 1971 and was extended in April 2003 for another 10 years, meaning it expired this year. Last April, the contract was extended temporarily so an appointed team could study the permit.

The government officially terminated the contract on Sept. 18. The Ministry has since asked police and the national army to guard the assets from illegal mining activities.

Timah'€™s Agung said that the company had been coordinating with Bangka-Belitung'€™s governor, police chief and military resort command chief to further enhance security in the area as well as to work on information disbursement to local residents about operational changes on the mining site previously owned by Koba Tin. '€œWe are proposing the '€˜security costs'€™, which are above Rp 1 billion (US$91,000) from the ministry'€™s budget,'€ Agung said.