Government awards 12 coal contracts to local firms

Government awards 12 coal contracts to local firms

JAKARTA (JP): Minister of Mines and Energy Kuntoro
Mangkusubroto awarded on Monday 12 mining contracts to local
investors to exploit coal resources in Central Kalimantan, East
Kalimantan, South Kalimantan and South Sumatra provinces.

Kuntoro said the awarding of the contracts indicated local
investors still believed in the prospects of the country's mining
sector despite the current economic and political turmoil.

It also proves that local investors feel comfortable with the
legal certainty provided by the current contract of work system,
the minister said.

"I express my highest appreciation to the investors because
their move could encourage other coal investors to invest in
Indonesia," Kuntoro said.

The 12 contracts of work (COWs) are grouped in the third
generation of coal contracts, the terms of which are based on
Presidential Decree No. 75 of 1996.

The government categorizes coal contracts into different
generations depending on the regulations they follow. Contracts
which follow similar regulations are placed in the same
generation.

First generation COWs, of which there are 11 contracts, were
awarded in the 1980s and are based on Presidential Decree No. 49
of 1981.

Second generation COWs, covering 18 contracts, were awarded in
the 1990s are based on Presidential Decree No. 21 of 1993.

In 1997, the government awarded 63 coal contracts under the
third generation.

The three types of COWs have the same royalty rates but
investors get different tax treatment.

The Ministry of Mines and Energy's director of coal Soedjoko
Tirtosoekotjo said the 12 coal COWs approved on Monday included
three contracts in East Kalimantan awarded to PT Bumi Laksana
Perkasa, PT Dayalapan, PT Wadungmas Tambang Mulia; two contracts
in Central Kalimantan awarded to PT Asmin Bara Bronang and PT
Asmin Koalindo Tuhup; one contract for an area bordering Central
Kalimantan and South Kalimantan awarded to PT Torah Antareja
Mining.

PT Baramulti Suksesarana, PT Kadya Carakamulia, PT Sumber
Kurnia Buana and PD Baramarta were each awarded contracts in
South Kalimantan.

The remaining two contracts were awarded to PT Energi Batubara
Sumatera and PT Pinangjaya Sarana Bara in South Sumatra.

Under the contracts, contractors have to hand over 13.5
percent of their output in cash on the basis of free on board or
sale point prices.

They have to pay taxes to the government in accordance with
the 1994 taxation law.

They also have to pay property tax and the same amount in dead
rent. Ninety percent of the property tax is paid to the local
administration.

Chairman and chief executive officer of the Swabara Group
Greame Robertson announced that the group signed two contracts
through its subsidiaries PT Asmin Bara Bronang and PT Asmin
Koalindo Tuhup.

He said the group currently controls a coal contract area in
Central Kalimantan, the contract for which was signed in 1997.
The signing of the two new contracts brings the group's coal
contract areas in Central Kalimantan to 137,000 hectares.

Swabara, which is controlled by local tycoon Hashim
Djojohadikusumo and Soekanto Tanoto, started coal mining in 1988
and has become one of the country's largest coal mining groups,
with output exceeding 12 million tons in 1998 from two mines in
Kalimantan.

PT Adaro Indonesia, the largest of the group's coal mining
operations, produces the well-known Envirocoal brand, which is
considered one of the world's cleanest types of coal with a low
sulfur and ash content.

Adaro's production is forecast to rise to 20 million tons per
year by 2001, which will make it the largest coal producer in the
country as well as one of the largest mines in the world. (jsk)