Saturday, December 27, 2008

The Mineral & Coal Law

Until recently, mining Exploration & Production in Indonesia are carried out based on Contracts between Foreign mining companies and the Indonesian Government or State Owned Company.

In this case, relationship between the contracting parties i.e. the government and foreign companies are equal, so if there is a dispute among them, the foreign company can bring the case to a Court or Arbitration, such as in the Newmont case. Considering that many contracts are made based on Foreign Laws, in many cases the government has become the losing party.

In order to stop this from happening again, the Parliament (DPR) has passed the Mining & Coal Law (MINERBA) 16 December 2008. In this case I will quote an article in the Mining website which wrote that Article 35 of said Law stipulates that there are three basis for conducting mining works:
1)Mining Operation Permit(IUP), for large scale mining by large companies
2)People's Mining Permit(IPR), for small scale mining by Cooperative/Community
3)Special Mining Operation Permit(IUPK): granted by the minister
Now that the Mining Operations are based on Permits, the government would have a superior position compared to the mining companies, therefore there would be slimmer risks of losing court/arbitration cases.

Article 36, stipulates that IUP consists of 2 phases: Exploration and Production, which can be granted by The Head of Regent/Mayor for Mining in Regent/City; and Governor for Mining covering several Regents/Cities; and the Minister for mining that covers several provinces; to companies, cooperatives as well as individuals.
The validity of IUP Exploration varies, for metal mineral mining: 8 years max.,
for non Metal: 7 years. For granite mining: 3 years, Coal: 7 years. While IUP Production: 5-20 years. Every holder of IUP is guaranteed to get IUP Production.
Mining area for Metal Mineral:
IUP Exploration: 5,000-10,000 Hectare; IUP Production: 25,000 Hectare
Mining area for Non Metal Mineral:
IUP exploration: 500-25,000 Hectare; IUP Production: 5,000 Hectare
Mining area for Granite Mining:
IUP Exploration: 5-5,000 Hectare; IUP Production: 1,000 Hectare
Mining area for Coal Mining:
IUP Exploration: 5,000-50,000 Hectare; IUP Production: 15,000 Hectare max.
Mining area for People's Mining Permit (IPR): for Individual 1 Hectare max., for Comunity: 5 Hectare max., for Cooperative: 10 Hectare max.
Mining area for Special Mining Operation Permit:
For Metal Mineral Mining (Exploration: max. 8 years; Production: 20 years):
IUPK Exploration: 100,000 Hectare max; IUPK Production: 25,000 Hectare max.
For Coal Mining (Exploration max. 7 years/Production: 20 years):
IUPK Exploration: 50,000 Hectare max; IUPK Production: 15,000 Hectare max.

In this connection Detik wrote that the said Law doesn't seem to care about the bad impacts of minings on the lives of the surrounding people. Even if there are three Groups in the Parliament which walked out of the final session, but only because they do not agree with a contradictory regulation of the said Law. Article 169a stipulates that existing Mining Contracts prior to this Law shall remain valid until they expire. However Article 169b stipulates that all Mining Contracts should be adjusted in line with this Law.

2 comments: said...

Good articles...
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