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mid the planned overhaul of mining rules, legal experts and business players are urging for clarity and consistency in new regulations that would replace the controversial 2009 Mining Law.

According to an academic assessment by the University of Indonesia legal experts in cooperation with the Indonesian Mining Association (IMA), several points in the current law need to be addressed. These include the status of mining contracts and licenses and the authority over issuing mining permits.

Tri Hayati, one of experts carrying out the academic assessment, argued that the current licensing regime under the 2009 Mining Law actually reduced the state'€™s control over natural resources, which is mandated by the Constitution, because supervision was not regulated. However, she continued, going back to a contract regime was not a good option either, because the country wouldn'€™t want to find itself in the same position with mining firms as it did prior to the 2009 law.

'€œTherefore, we have to move to a hybrid concession regime, with a license from the government and a public contract to define the rights and obligations of concessions holders,'€ she said.

The public contract, she explained, should be different from private contracts the country currently has with a number of mining firms. The public contract, she said, would involve the people'€™s assessment and evaluation, which could be through the House of Representatives.

The Mining Law passed in 2009 has been criticized as nationalistic, as it aims to replace mining contracts, many of which are between the state and foreign corporations, with a licensing regime that gives the country a stronger position against mining firms. Since Indonesia'€™s independence, successive governments have signed dozens of so-called contracts of work with mineral and coal mining firms to lure much-needed investment into the country.

One of the weaknesses the government sees in the contracts is that companies can challenge the state in international arbitration if disputes emerge.

Since the passage of the 2009 Mining Law, only mining permits are issued. However, this caused new problems, particularly because not only the central government but also local administrations can issue the permits. Due to poor supervision and illicit practices to seek personal benefits, many mining permits were issued by neighboring administrations for concession areas overlapping each other.

The need for a revision of the 2009 Mining Law arose last year when the government passed a new law on provincial administrations that removed all authorities granted to regency and municipal administrations to issue permits for mineral and coal mining activities.

IMA chairman Martiono Hadianto argued that the 2009 Mining Law was also unclear and contained conflicting articles. For example, he said, the law said existing contracts with mining firms would be honored but in another article it requested adjustment of the contracts to comply with the 2009 law.

'€œAll IMA members comply with the regulations as long as they can guarantee the business activities,'€ Martiono said.

He also criticized the government'€™s decision to ban mineral ore exports based on an interpretation of the 2009 Mining Law. Martiono argued that the law only mandated value-addition to minerals but did not mention anything about banning exports of mineral ores.

The issue was brought before the Constitutional Court (MK) for judicial review last year. The court ruled in favor of the government, arguing that the ban was necessary to ensure the country would have enough ore for domestic smelters.

Under the 2009 Mining Law, the government requests mining firms to either individually or jointly developed smelters, so that minerals can be processed domestically before export and the country get the benefit of added-value products. '€œSmelter development is an investment, and therefore there should be articles about the feasibility of such projects. Moreover, refining isn'€™t actually the scope of mining but industry,'€ he said.

IMA Syahrir AB added that any revision of the 2009 Mining Law should feature a clearer categorization of minerals and should not generalize, because the characteristics of each mineral came with different economic aspects.

The academic assessment proposed a more comprehensive notion of mining in what it called a vertical view to replace the current horizontal paradigm. Under the vertical point of view, mining areas would no longer be seen as anything below the surface but also the space above.

'€œThat will help us avoid conflicts with the forestry authorities,'€ Syahrir said.
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