Adaro claims to have reached agreement on contract amendment

IDX-listed coal giant PT Adaro Energy Tbk claimed to have reached an agreement with the government on the amendment of its coal mining contract of work, Kontan reported on Wednesday.

The paper quoted Adaro Director M. Syah Indra Aman as saying that the company has accepted all the six main changes to the contract as proposed by the government during recent contract renegotiation process. ?Adaro (mining contract renegotiation) has been completed. We?re now waiting for the next step from the government,? he said, but stopped short of disclosing when the company would finally sign the amended contract.

Aman said that completing the completion of the mining contract amendment would provide certainty for the company in running its coal mining business going forward.

The government, as mandated by the 2009 Mining Law, has been pushing coal mining firms holding the so-called coal mining contracts of work (or PKP2B) and mineral mining firms holding the mining contracts of work (or KK) to amend their contracts through renegotiation process. The contract amendment as supposed to be completed by 2010, but renegotiation process has been protracted as many mining firms continue to opposed the proposed changes which include reduction in size of concession, higher royalty for the state, divestment obligation for foreign mining firms, the use of local goods and services, and conversion of the contract into IUP mining business permit.

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 PKP2B contracts, only 22 have amended their contracts.

Director General of Mineral and Coal Bambang Gatot Ariyono has said that the mining contract amendment must be completed this year and the government would not tolerate further delay. He, however, did not say what the consequences will be for miners if they fail to meet deadline. (*)