The government will give holders of existing mining rights, or KPs, three options to bring their mining areas into line with the restrictions imposed by the recently enacted mining law, so as to help them avoid forfeiting their concessions if they are incapable of fully developing them.
Energy and Mineral Resources Minister Purnomo Yusgiantoro said that one of the options for the holders of mining rights, normally small- to medium-sized miners, was to share their concessions with third parties.
â€śGive those parts of your concessions that have yet to be developed to other companies,â€ť Purnomo told mining firms representatives at a seminar on the new mining law on Monday. â€śLet them then develop the sites.â€ť
Under the regulations that will be issued to put the mining law into effect, mining firms could end up losing some of their concessions if they fail to develop them within a specific period of time under the governmentâ€™s â€śuse it or lose itâ€ť policy.
A second option, the minister said, would be for miners to simply hand their concessions back to the government if they are unable to develop them. Purnomo said that the government would then put such concessions up for auction.
As for the third option, Purnomo suggested that mining companies could work together with the government to ensure the maximum exploitation of their concessions, adding that the government would help them find partners.
Jeffrey Mulyono, the head of the Indonesia Coal Miners Association, said he was all in favor of the government working hand-in-hand with the mining companies so as to help them develop their concessions.
â€śBut I donâ€™t agree with the relinquishment idea,â€ť he said. â€śI would prefer to see the government cooperating with mining firms over the long term to help them develop their areas.â€ť
Initially, the government had said the new rules on the use of land would only apply to smaller concession holders, rather than the operators of large projects. These are usually international firms and continue to be governed by the old contract of work system, under which individual arrangements are negotiated with the government.
Bob Kamandanu, the president director of PT Berau Coal, concurred with Mulyono, saying that should a concession be revoked by the government, the mining company involved would be left significantly out of pocket as a result of the expenses incurred during exploration.
PT Berau Coal is a joint venture of PT Armadian Tritunggal, with a 51 percent stake, Netherlands-based Rognar Holding BV, with a 39 percent stake, and Japan-based Sojitz Corp, which holds the remainder. The firm owns a concession of about 118,000 hectares in the northern part of East Kalimantan Province.
The holders of mining rights also face the possibility of losing their concessions because the new mining law limits the size of concessions for all coal and mineral ore operations to 15,000 to 25,000 hectares at the production stage.
Although companies with contracts of work issued before the passage of the law will not be affected, mining firms are required to submit operating proposals to the government within a year, or have their concessions adjusted in line with the new law. It means many large mining companies in Indonesia could be affected, including Freeport McMoRan Copper & Gold Inc. and Newmont Mining Corp., which hold 5.9 million hectare concessions each.