Government reiterates plan to ease mining contract extension

The government reiterates plan to ease the current requirement for mining contract extension in a bid to lure fresh investment in the country?s mining sector, Kontan reported on Monday.

While the current Government Regulation No 77/2014 stipulates that miners can only request for contract extension two years before expiry, under the new plan, miners can make the request five years prior to the expiry of the contract.

A source told the paper that the issue was discussed on Friday during a meeting at the Office of the Coordinating Minister for the Economy. The source said that the ministers discussed plans to revise the Government Regulation No 77/2014 and Government Regulation No 1/2014.

The latter regulation bans the export of mineral concentrates starting January 12, 2017. But as most miners including the giant gold and copper firm PT Freeport Indonesia have yet to complete construction of the required domestic smelter, the government will revise the Government Regulation No 1/2014, which earlier reports suggested that the miners will be allowed to continue export of mineral concentrates but they must finish the required domestic smelters in 3-5 years.

Then minister of energy and mineral resources Sudirman Said first proposed the revision of Government Regulation No 77/2014 to allow miners to apply for early extension of their mining contracts, but the plan was shelved following strong opposition.

PT Freeport, a local subsidiary of US-based Freeport McMoRan Copper & Gold Inc, is among of the miners which have long called the government to ease the mining contract extension requirement. The company, whose mining contract is set to expire in 2021, is seeking to extend the contract to 2041. But under the current regulation, the company can only apply for a contract extension two years prior to expiry, or in 2019. However, the company argued it needs certainty over the fate of the contract as PT Freeport is set to immediately invest billions of dollars to develop underground mine in Papua, and a copper smelter in Gresik, East Java.

Irwandy Arief, Head of the Indonesia Mining Institute welcomes the plan to ease the mining contract extension, saying that such policy would help attract badly needed fresh investment in the country?s mining sector. (*)