Govt mulls removing controversial ministerial decree

The government is considering removing a controversial ministerial decree which requires mining companies operating in protected forests to pay a compensation amounting to one percent of their total production.

The move aimed to create a more conducive business climate in the country's mining sector, Simon Felix Sembiring, director general of mineral, coal and geothermal resources at the Ministry of Energy and Mineral Resources, said.

The compensation fund requirement has been strongly opposed by the country's mining companies.

"The ministries of energy and mineral resources, forestry and finance have intensively discussed the need to remove the compensation fund requirement. The ministry of finance is now working on the final decision regarding the proposal," Sembiring said at an international conference on coal mining activities in Nusa Dua, Bali on Monday.

The minister of forestry issued a decree in March 2006 requiring mining companies operating in protected forests to pay compensation funds amounting to one percent of their total production. According to the existing forestry law, mining companies are prohibited from developing an open-pit mine in protected forests.

Meanwhile Minister of Forestry MS Kaban said in Yogyakarta that the requirement to pay compensation fund was still needed so that the government would have enough funds to rehabilitate the damages in the country's forests.

According to him, the compensation fund payment is a win-win solution for both the government and mining companies. "It is a kind of incentives for miners. The mining companies will be allowed to develop an underground mining operation in the protected forest," he said. (*)