Govt pursues coal giants to cut mining areas

Coal mining giants are being told by the government to reduce the size of their mining areas to comply with a mining law amid renegotiations of contracts of coal mining work (CCoW), locally known as PKP2B, The Jakarta Post reported on Tuesday.

The companies included PT Kaltim Prima Coal (KPC), PT Arutmin Indonesia and PT Berau Coal, and others that held thousands of hectares of concessions, said R. Sukhyar, Director General for Mineral and Coal at the Energy and Mineral Resources Ministry.

?They have to submit their long-term plans regarding the size of areas they need [for development] until their contracts expire. They have submitted the plans. However, the proposals cover too wide of a scope right now,? Sukhyar said.

Under the 2009 Mining Law, coal production area is capped at 15,000 ha, excluding supporting areas, and exploration area is set at between 5,000 to 50,000 ha.

In the implementation of the law, the government is struggling to negotiate several mining contract issues, including those centering on mineral and coal, to be adjusted in accordance with the country?s interests.

The issues under negotiation consist of the size of mining areas, divestment, state income, domestic processing, continuance of operation as well as the usage of local goods and services.

KPC, Arutmin and Berau Coal which own the first generation coal mining contracts are among companies currently still holding huge working areas.

KPC and Arutmin, both of which are subsidiaries of Indonesia?s largest coal miner, Bumi Resources, now have 90,938 ha and 70,153 ha of mining concessions, respectively, for which contracts will expire in 2021 and 2019, according to data from Bumi Resources? website.

Meanwhile, Berau Coal currently holds 118,400 ha of concession areas valid until 2025.

Berau Coal general manager for corporate communication Singgih Widagdo said the company was still laying out plans on issues pertaining to the area that it would need.

?Regarding mining size, Berau Coal?s initial concession is around 400,000 ha, but it was relinquished to 118,400 ha at present? Singgih said over the weekend.

?The mining size relates to our mining plan until 2025. We have submitted our production volume plan but have yet to submit the area size. We?re working on it? he added.

After a coal mining contract expires, companies are able to request an extension with an IUP mining license.

Sukhyar, however, was quoted by Bisnis Indonesia as saying Tuesday that the coal miners holding the PKP2B contracts are not obliged to adjust the size of their concessions when their contracts remain valid. They?re only obliged to cut down the size of the concessions once their contracts expire, and seek to extend it under the IUP mining permit regime, he added.

Apart from the mining size issue, Berau Coal is also working on issues pertaining to state income, according to Singgih. The company expected to complete renegotiations as early as next month to comply with the recent deadline set by the government, he added.

President Susilo Bambang Yudhoydno?s outgoing administration aims to close all renegotiations with mineral and coal contract holders in September this year, or a month prior to the new government taking over in October, according to Coordinating Economic Minister Chairul Tanjung.

The current administration is still struggling to renegotiate 107 contracts of works, both for mineral and coal. As many as 40 contracts of works have been completed, according to the latest report from the Energy and Mineral Resources Ministry. (*)