The contracts of five mining companies are under threat of termination if they refuse to renegotiate their contracts with the government. The five mining companies are PT Freeport Indonesia, PT Irja Eastern Minerals, PT Nabire Bakti Mining, PT Masao Pasik, and PT Pacific Masao.
"They (the mining companies) must renegotiate. The legal basis is clear, namely Law No. 4/2009 on Mining Mineral and Coal and Government Regulation (PP) No. 45/ 2003 regarding Tariff on Non-Tax State Revenue of the Energy & Mineral Resources Department. If they do not want to, then yes they will be terminated, " Deputy Minister of Energy and Mineral Resources (EMR) Widjajono Partowidagdo to Investor Daily, Jakarta, Thursday (20/10). mining equipment
Widjajono asserted that every mine operation in Indonesia must comply with the law. Mining companies originally adhere to Law No. 11/1967 on Basic Provisions of Mining. "However, since the Law No. 11/1967 was revoked and no longer valid, the law is now based on Law No. 4/2009," he said.
The Minister Jero Wacik, meanwhile, said that the mining contract renegotiation is one of three priorities his ministry will work on during the three years of his office. The other two work program priorities are achieving target of 945 thousand barrels lifting per day (bpd) and the completion of mega-projects electricity of 10,000 MW.
"Concerning the mining contract renegotiation, I cannot comment much, I must first study the case," he said via cell phone. Jero Wacik held a top ranking Energy officials meeting yesterday to prepare and process matters such as mining contract renegotiation as per the president's instructions. crusher mobile
The Ministry of Energy, he said, is evaluating all mining contracts in Indonesia. "We will make list of mining companies on priority for renegotiation, "he said.
During the inauguration of the United Cabinet of Indonesia (KIB) II, President Susilo Bambang Yudhoyono (SBY) ordered the Minister of Energy to evaluate various mining contract of works, considered vastly unfair. The renegotiations are intended to make the contract of works fairer and more appropriate. grinding mill ball mill
The 16 renegotiation issues
Widjajono said that there are 16 issues to be renegotiated. Six are strategic issues, such as work area, contract extensions, revenues, divestiture obligations, processing and purification obligation, as well as the obligation of use domestic goods and services. "But the dominant issue is the need for state revenue increase, "he said.
Renegotiation on the amount to be provided to the state, he said, would not work out if the company is not making profit. "Show us (the government) their losses and they don't need to renegotiate. The government wants mining companies to be open about their income. The purpose of the renegotiation is to have a fair profit sharing, "he explained.
Widjajono see the renegotiation as means to restore the sovereignty of state over Indonesia's wealth of natural resources and also improve state revenues. The base of renegotiation is article 33 of the 1945 Constitution, Law No. 4 / 2009, especially Article 169 paragraphs a and b and article 171. vibrating screens for cheap
The Director General Thamrin Sihite hopes that the renegotiation of mining contracts, both contract of works (KK) as well as coal contract of works (PKP2B), can be completed this year.
Currently, there are about 113 mining contracts to be renegotiated, consisting of 37 KKs and 76 PKP2Bs. Of the total, 5 KKs do not approve of the entire renegotiation clause, 21 KKs agreed to some clauses, and 11 KKs agreed to the entire clauses. cone stone crusher in South Africa
Concerning the 76 PKP2Bs, none are willing to renegotiate their contracts, mainly on royalties and processing and refining duties. The holders of PKP2Bs consider the royalty of 13.5% as the maximum. They also consider the processing obligations as unnecessary, because coal is an end user product that requires no further processing.
In the renegotiation concerning state revenue or royalties, the government's benchmark is PP 45/2003.
Although the Indonesian Mining Association (IMA) proposed a royalty of 2%, the government still refers to PP 45/2003 where the royalty for gold mine is 3.75%.
Contract sanctity
A member of the Indonesian Mining Society (MPI), Herman Afif Kusumo, considered that a KK or a PKP2B may not always apply absolutely until the end of a contract. A renegotiation of KK and PKP2B could not be said to violate the sanctity of contract, because it is not the will of the government, but mandated by Law No. 4/2009.
He said Law No. 4/2009 is a political decision of the people of Indonesia. In it is the spirit of mining resources management for the sake and prosperity of the Indonesian people.
"In Law No. 4 /2009, there are no longer any KK and PKP2B, instead there is the mining permit (IUP). It is in accordance to Article 33 of the 1945 Constitution. With the enactment of Law No. 4 / 2009, the KK and PKP2B no longer apply, "he said. cone crusher
On the other hand, he added, Indonesia still respect the KK and PKP2B already issued. "That is why in the Law, there is a transitional section to respect the KK and PKP2B until the end of their term, "he explained.
Despite that fact, however, KK and PKP2B holders should adjust themselves with the contents in Law No. 4/2009. "Thereby the renegotiation issue. Under a legal logic, contracts must not conflict with the existing law, "he said.
Herman said that problems arise because many holders of KK and PKP2B are reluctant to renegotiate. "They are comfortable with the contents of their existing contracts. This is understandable, since in the KK and PKP2B many privileges have been provided by the government at the time when it required investments, "he said.
Be Decisive
A member of the 7th Commission of House of Representatives, Dito Ganinduto, said the government should being assertive. Firstly, in particular to contractors with mining areas exceeding the maximum limit of 100,000 hectares (ha) for minerals and 50,000 hectares for coal. Freeport has a working area of up to 1.8 million hectares and Inco has about 180,000 hectares.
"When a contract expires it must be terminated," he said. Secondly, the management should be left to state represented by a state / local enterprise. Extension of a contract with the former contractor can only be made if the contractor becomes a minority shareholder. ball mill manufacturer
Thirdly, the state revenues through taxes and royalties should be increased by retaining applicable taxes in the current contract. As for royalties, the rate stipulated in Government Regulation No. 45/2003 should apply to all contractors without exception.
Fourthly, the obligation to divest should apply to all KK and PKP2B in accordance with article 107 of Law No. 4/2009 and article 97 of PP No. 23/2010. This is to protect strategic interests, including maximising revenue, the government should make efforts to boost stock ownership by national enterprises (SOEs, district and private enterprises) to become the majority in 10 years.
Fifthly, the obligation of processing and refining (smelting) should be applied in accordance to Article 103 of Law No. 4 / 2009 and article 93 and 94 of PP No. 23/2010. The government should ensure the smelting company's shareholder is a state owned company and/or national private. "Cases like PT Indonesia Asahan Aluminium (Inalum) and PT Smelter Indonesia, in Gresik, where stakeholders are dominantly foreign 58.88% and 100% respectively should not happen," said Dito.
Sixthly, the obligation to use local goods and services in accordance with Article 106 of Law No. 4/2009. For that, said Dito, the government should support the achievement of competency of SoEs and national private sector to provide the needed services. solutions for mine quarry
Vice Chairman of the Indonesian Mining Association (IMA) Tony Wenas said that contract or agreement of both parties must be respected. "Otherwise there will be consequences for those who breach the contract, namely arbitration, "he stated.
He said that Article 169 paragraphs a and b are conflicting. In Article 169a the KK and PKP2B 'must be respected' prior to the enactment of the Mining Law. Whereas Article 169b states that KK and PKP2B 'must Be adapted 'to the Mining Law. As a result, he continued, there is no certainty concerning the law of contract /agreement mining and this has the potential to become disputes.
"IMA proposed that Article 169 subsection b must be removed. If a renegotiation is imposed with reference to this article, government could be sued in international arbitration, " he said.
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