Mining Law Additions to Be Set by July
The Energy and Mineral Resources Ministry expects implementing regulations for the recently enacted Mining Law to be ready by July at the latest, hopefully clearing the way for a resumption of investment in the sector.
Industry players have been holding off on new investments because they won’t know how their interests will be affected by the new legislation until the regulations have been issued, particularly with regard to environmental issues and the treatment of local communities in mining areas.
“The drafts for the implementing regulations should be relatively easy to finish. We expect them by March,” Bambang Setiawan, the ministry’s director general of mineral, coal and geothermal resources, said on Tuesday. “After the drafts are ready, we’ll still have to talk to other relevant institutions, including the forestry and transportation ministries.”
Bambang said the ministry expected the regulations, which would also set coal reference prices, to be signed by the president in July at the latest.
“We told the House of Representatives that we would be finished by October. But we will pull out all the stops to finish ahead of deadline,” Bambang said. “We still have to discuss the implementing regulations with the stakeholders and amend some of the contents. It could still be a long process after the drafts have been prepared, but that’s beyond our control.”
The Energy Ministry has been providing pricing guidelines for firms holding coal contracts of work since last year, he said, to prepare them for the government’s plan to regulate the prices at which companies sell their coal based on government-set reference prices, under a “coal price index.” It only started to do this with holders of mining concessions a few weeks ago, however.
“We have no problem with the holders of coal contracts of work. The problem is with the concession holders. We will set the base prices every month and then let the local governments deal with the concessionaires, so they don’t sell their coal below the base prices,” Bambang said on the sidelines of the OZMine 2009 mining conference in Jakarta.
The government hopes to combat transfer pricing in the coal market - a practice whereby a company sells coal to a foreign-owned subsidiary at lower prices to avoid paying taxes - and to increase state revenues from the sector, Bambang said.
He said base prices would be classified into four different categories according to the coal’s calorific content, or energy level, and would be based on the average of global benchmarks such as the Barlow Jonker and Platts indexes.
Industry players have been holding off on new investments because they won’t know how their interests will be affected by the new legislation until the regulations have been issued, particularly with regard to environmental issues and the treatment of local communities in mining areas.
“The drafts for the implementing regulations should be relatively easy to finish. We expect them by March,” Bambang Setiawan, the ministry’s director general of mineral, coal and geothermal resources, said on Tuesday. “After the drafts are ready, we’ll still have to talk to other relevant institutions, including the forestry and transportation ministries.”
Bambang said the ministry expected the regulations, which would also set coal reference prices, to be signed by the president in July at the latest.
“We told the House of Representatives that we would be finished by October. But we will pull out all the stops to finish ahead of deadline,” Bambang said. “We still have to discuss the implementing regulations with the stakeholders and amend some of the contents. It could still be a long process after the drafts have been prepared, but that’s beyond our control.”
The Energy Ministry has been providing pricing guidelines for firms holding coal contracts of work since last year, he said, to prepare them for the government’s plan to regulate the prices at which companies sell their coal based on government-set reference prices, under a “coal price index.” It only started to do this with holders of mining concessions a few weeks ago, however.
“We have no problem with the holders of coal contracts of work. The problem is with the concession holders. We will set the base prices every month and then let the local governments deal with the concessionaires, so they don’t sell their coal below the base prices,” Bambang said on the sidelines of the OZMine 2009 mining conference in Jakarta.
The government hopes to combat transfer pricing in the coal market - a practice whereby a company sells coal to a foreign-owned subsidiary at lower prices to avoid paying taxes - and to increase state revenues from the sector, Bambang said.
He said base prices would be classified into four different categories according to the coal’s calorific content, or energy level, and would be based on the average of global benchmarks such as the Barlow Jonker and Platts indexes.