Adaro, Arutmin agree to amend coal contract

Coal giants PT Adaro Energy Tbk and PT Arutmin Indonesia claimed that they have reached agreement with the government on the proposed changes to their coal contracts of work (or PKP2B), Kontan reported on Friday.

The paper quoted Garibaldi Tohir, President Director of IDX-listed Adaro Energy, as saying that the company has agreed to the six main changes to its contract as proposed by the government.

He said that Adaro is now waiting for the signing of the final amendment agreement with the government.

Meanwhile, CEO of Arutmin Ido Hutabarat also said that his company has also agreed to the propose changes to its coal contract of work including on applying a prevailing law system, under which the tax rates and royalty tariff can change in accordance with the prevailing laws and regulations.

The government has been struggling for years to force coal and mineral miners to amend their mining contracts to meet stipulations set in the 2009 Mining Law.

Director General of Mineral and Coal Bambang Gatot Ariyono said last month that the government will have to extend again the deadline for the completion of the ongoing mining contract renegotiation process to next year as it would not be completed this year.

Among of the tough issues in the mining contract renegotiation process is the requirement for miners to follow prevailing tax regulations under the new contract, instead of a nailed down system.

Of the 34 mineral mining companies undergoing renegotiation process with the government, only 10 have signed mining contract amendment, while of 73 coal miners holding the so-called mining contracts of work (PKP2B), only 22 have amended their contracts.

Some said that miners are avoiding to finalize mining contract renegotiation with the government as they anticipate the planned revision of the 2009 Mining Law. (*)