Foreign miners reject the government?s proposed renegotiation

Some Indonesian miners that hold contract of works (CoW) have declined to renegotiate their existing contract with the government, slowing the government?s plan to bring terms in the contracts in line with a 2009 mining law.

About 30 percent out of 6,000 foreign mining contractors have declined to renegotiate their contract with the government, said Chief Economic Minister Hatta Rajasa.

?I have received reports that only 65-70 percents of the contracted have agreed to the proposed amendment in the contract,? said Rajasa on Friday.

Rajasa, who is also the chairman of the National Mandate Party, was aware that renegotiation of mining contracts would be difficult as mining contractors were keen to keep the current revenue split which was signed in the past.

But the government was adamant to pursue renegotiation as it is keen to boost state revenue from the mining sector.

The government will continue to talk to miners into agreeing to renegotiation, said Hatta, adding the government will not take action arbitrarily and will not breach the contract of works.

Boost Royalties
The energy and mineral ministry will lead renegotiation with mining contractors, said Hatta.

Terms in the mining contracts that will be amended including overlapping mining areas with other activities such as plantation.

The government will also ban mining companies from exporting ore and they are required to process the ore into semi-finished material in domestic smelters before exporting the metal.

Previously, Finance Minister Agus Martowardoyo said many contract of works made in the past did not give fair revenue share to the government because the contracts were made without involving the finance ministry.

The finance ministry has asked to be involved in the renegotation, said Agus, adding there are 40 mining contracts for minerals and 8,000 mining licenses that need to be reviewed. (*)