Adaro claims it is ready sign contract amendment

By Thomas Sembiring

IDX-listed coal giant PT Adaro Energy Tbk said it is ready to sign an agreement with the government for the amendment of its coal mining contract of work (or PKP2B).

Adaro President Director Garibaldi Tohir said on Monday that the company had in 2014 signed a MoU with the government, agreeing to the six-point changes into its mining contract as proposed by the government.

But he said that changes in the country?s leadership and the ministerial post of ministry of energy and mineral resources have delayed the final signing of the mining contract amendment with the government.

?For Adaro, we?re ready. We had signed (a MoU) with the government,? Garibaldi said, adding that the company is now waiting for the government when to finally sign the contract amendment.

The government has been struggling to force mining firms to amend their contracts to comply with the terms set in the 2009 Mining Law. Results, however, have been disappointing.

Of the 34 mineral mining companies holding the KK (mining contract of work), only 10 have signed mining contract amendment, while of the 73 coal miners holding the PKP2B, only 22 have amended their contracts.

The main point of changes in the contract as proposed by the government include the reduction of mining concession, conversion of contract from KK to IUP mining business license, the use of local content, downstream obligation, higher royalty, and obligation for foreign miners to divest up to 51 percent shares to local investors. The last three are seen as the most difficult issues to be agreed by miners and the government particularly amid the current downturn in the global commodity market.

Editing by Reiner Simanjuntak