Govt decides not to extend Koba Tin contract
Wednesday, September 25 2013 - 01:00 AM WIB
Vice Minister of Energy and Mineral Resources Susilo Siswoutomo said that the decision was taken after taking into account the company?s poor performance and track record.
Susilo said that during the past few years, Koba Tin has been suffering from financial losses, which in 2012 reached US$40.9 million, 25 percent of which has to be shouldered by state-owned tin miner PT Timah as a 25 percent owner of the company, which is 75 percent controlled by Malaysia Smelting Corp. Bhd. (MSC), which has requested for an extension of the contract for another 10 years.
He added that Koba Tin has also failed to carry out its land reclamation obligation, and to pay the salary of workers.
The contract of Koba Tin, which has been operating more than 41,000 ha of tin concession in Bangka Belitung province for 40 years, ended at the end of March of this year. But Minister of Energy and Mineral Resources Jero Wacik extended the contract until June and made a second extension until end of August, pending the completion of a review and assessment by an independent team.
Susilo said that the team finally issued a recommendation that there is no need for the Koba Tin contract to be extended.
He said that in the meantime, the tin concession will be treated as national reserves area before it is assigned to a new contractor.
There have been talks that the concession be awarded to consortium of state-owned and provincial-government owned companies.
Acting Governor of Bangka Belitung Province, Rustam Effendy, said that his administration was ready to partner with state-owned company to operate the tin concession.
Meanwhile, Susilo reiterated that the government was ready to deal with possible lawsuit launched by SMC, which reportedly plans to go to the international arbitration if the government of Indonesia fails to extend the Koba Tin contract for another 10 years. (*)