Govt plans to levy 1% royalty on mining firms in protected forests starting 2008

The government plans to collect one percent royalty from mining companies operating in protected forests beginning in 2008 as part of the compensation they have to pay for using part of forest conservation areas, Investor Daily reported on Tuesday.

Forestry Minister MS Kaban said in Jakarta on Monday that his office was still formulating a regulation on the payment of the royalty, "but we hope the royalty could be collected beginning 2008," he added.

The minister, however, said that the regulation which required them to provide twice the size of the land they use in protected forests in productive forest areas remained effective despite the royalty payment.

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. Under the existing forestry law, mining companies are prohibited from developing an open-pit mine in protected forests.

On June 2006, Simon Felix Sembiring, director general of mineral, coal and geothermal resources at the Ministry of Energy and Mineral Resources, said that 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 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," Simon said (*)