Govt rules out revision of mining contracts given to foreign firms

The Ministry of Energy and Mineral Resources has ruled out the possibility of revising the contracts of works (mining contracts) awarded to foreign mining companies, saying that the revision would seriously damage investors’ confidence in the country’s mining sector, Investor Daily reported on Thursday.

“We have to be extra careful. If the contracts of works are revised, its implication will be quite diverse,” said Sukhyar, the secretary of the ministry’s directorate general on energy and mineral resources.

A number of natural resources-rich provinces including Papua, North Sulawesi and North Maluku have asked the government to revise the contracts of works given to foreign mining companies, saying that the contracts only benefit the foreign mining operators.

Sukhyar said that the problem could be settled by asking the mining companies to allocate a larger amount of community development funds so that the operation of mining companies would bring a positive impact on the economy of the villagers living around their mining sites.

A number of environmental organizations such as Jatam advocacy network on mining has also raised a similar concern. According to them, the mining companies often use their contracts of works to defend their operation against criticism. (*)