Government to Repossess Poorly Used Mining Concessions
Under regulations expected to be attached to the recently passed mining law, holders of mining rights, or KPs, including state-owned companies, may lose some of their concessions if they fail to properly develop the sites, a senior government official said on Wednesday.
Those who hold contracts issued before the passage of the law would not be affected.
“In terms of land concessions, KP holders, including state-owned enterprises, must follow what is stipulated in the mining law,” Raden Sukhyar, chief of the geology department at the Ministry of Energy and Mineral Resources, said at a mining seminar on Wednesday.
“Although [the law] does not mention anything about the KP holders, the implementing regulations will.”
Since local governments won the right to issue mining contracts amid decentralization, the number of KP holders has risen to roughly 2,000.
Simon Sembiring, an adviser to Minister of Energy and Mineral Resources Purnomo Yusgiantoro, said that under the new mining law, companies would have to submit annual development plans for their concessions. The government would then examine whether the companies are capable of managing the areas.
Criteria used to determine if a company can realistically develop its land include whether it has adequate equipment, manpower and capital.
Should a firm be found incapable, it would have to relinquish its concession to the government, which would then put it up for auction.
“We aren’t stupid,” Sembiring said in a telephone interview late on Wednesday.
“We will see if [mining companies] really can manage the areas within a year. If they can’t, then they have to return it to us.”
The implementing regulations are also expected to include separate rules for coal and metals mining.
The mining law, which has yet to be signed by the president, limits all coal mining companies to 15,000 hectares per concession when they commence production. The concessions, however, can increase in size through exploration activities.
Simon also said the government was still discussing how to proceed with reviewing the concessions of state-owned coal miner PT Tambang Batubara Bukit Asam Tbk, or PTBA, a KP holder with three sites in South Sumatra Province that exceed the government’s area limits.
PTBA holds 66,414 hectares of open pit mines in Tanjung Enim and Peranap Cerenti, South Sumatra.
Sukhyar of the energy ministry said that it was not possible to break down PTBA’s concessions into smaller areas because mining areas usually come in blocks, but added that the company might get to keep its concessions as long as it manages them effectively.
Nurtimah Tobing, PTBA’s head of investment, said on Wednesday that the company would have to see the regulations before commenting.
Sukhyar said that the forthcoming rules would also set the amount of time KP holders would have to transition to the new system.
Those who hold contracts issued before the passage of the law would not be affected.
“In terms of land concessions, KP holders, including state-owned enterprises, must follow what is stipulated in the mining law,” Raden Sukhyar, chief of the geology department at the Ministry of Energy and Mineral Resources, said at a mining seminar on Wednesday.
“Although [the law] does not mention anything about the KP holders, the implementing regulations will.”
Since local governments won the right to issue mining contracts amid decentralization, the number of KP holders has risen to roughly 2,000.
Simon Sembiring, an adviser to Minister of Energy and Mineral Resources Purnomo Yusgiantoro, said that under the new mining law, companies would have to submit annual development plans for their concessions. The government would then examine whether the companies are capable of managing the areas.
Criteria used to determine if a company can realistically develop its land include whether it has adequate equipment, manpower and capital.
Should a firm be found incapable, it would have to relinquish its concession to the government, which would then put it up for auction.
“We aren’t stupid,” Sembiring said in a telephone interview late on Wednesday.
“We will see if [mining companies] really can manage the areas within a year. If they can’t, then they have to return it to us.”
The implementing regulations are also expected to include separate rules for coal and metals mining.
The mining law, which has yet to be signed by the president, limits all coal mining companies to 15,000 hectares per concession when they commence production. The concessions, however, can increase in size through exploration activities.
Simon also said the government was still discussing how to proceed with reviewing the concessions of state-owned coal miner PT Tambang Batubara Bukit Asam Tbk, or PTBA, a KP holder with three sites in South Sumatra Province that exceed the government’s area limits.
PTBA holds 66,414 hectares of open pit mines in Tanjung Enim and Peranap Cerenti, South Sumatra.
Sukhyar of the energy ministry said that it was not possible to break down PTBA’s concessions into smaller areas because mining areas usually come in blocks, but added that the company might get to keep its concessions as long as it manages them effectively.
Nurtimah Tobing, PTBA’s head of investment, said on Wednesday that the company would have to see the regulations before commenting.
Sukhyar said that the forthcoming rules would also set the amount of time KP holders would have to transition to the new system.