Following the enactment of the new mining law, the government is drafting a regulation which will give special treatment for state enterprises.
“We will regulate the status of the state enterprises in the government regulation. We will surely protect them,” Bambang Setiawan, director general for minerals, coal, and geothermal energy, told reporters on Thursday.
Bambang, who was a speaker in a seminar themed ‘Mining Law and the Future of the State Enterprises’, did not give details on what kind of preferential treatment would be provided for state enterprises.
He only said that this would be stipulated in one of four implementing regulations related to the mining law.
Bambang’s statement on preferential treatment for state companies was in response to queries from Tato Miraza, director for development at state mining company PT Antam, who was also the speaker in the seminar.
According to Tato, several articles in the law would create difficulties for Antam.
He pointed as an example articles number 52 and 53, which limit mining exploration areas to between 5,000 and 100,000 hectares and cap the maximum production area at 25,000 hectares.
Tato said these articles would create legal uncertainties for Antam’s mining sites whose sizes were beyond the stipulated ranges.
“We suggest the government to give privileges for state enterprises to have larger working areas than what have been stipulated in the regulation,” Tato said.
The government has repeatedly said that the new mining law would not change the existing contracts. But, the holders of contracts with mining sites bigger than the stipulated sizes are required to submit working plans for their entire working areas.
Bambang said this regulation would also apply to state owned mining companies.
Energy and Mineral Resources Ministry Purnomo Yusgiantoro in an earlier interview said that the right of mining companies’ to work existing areas might be given either to central government or to regional government if the companies failed to submit comprehensive working plans as required.
It’s not yet clear whether in these cases similar penalties will apply to state owned companies. During the Thursday seminar, Tato was also questioning two other articles about the requirements for mining companies to sell some products to the domestic market and to build smelters within five years.
Tato said Antam exported all of its ferronickel, which is its main product, because there were no local industries to absorb the metal.
“We hope that the domestic obligation requirement will only apply when the domestic market is available,” Tato said.
With regard to smelter requirements, Tato said Antam actually supported this regulation. However, he said that it would be difficult to finish building such smelters in five years as requested by the law.
According to him, Antam should be given at least seven to ten years to build smelters.
He added that Antam and other state-owned mining companies might face difficulties to build smelters within five years as financial institutions were not enthusiastic to provide loan for such projects.
“We expect the government to encourage domestic banks to finance smelter projects,” Tato said.
The long-debated mining law was passed by the House of Representatives in December last year.
Now the government is formulating the four proposed implementing regulations to put the law into effect.
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