Govt to begin renegotiation of mining contracts this year

The Indonesian government will begin the renegotiation of mining contracts awarded to foreign companies this year so that the existing mining companies would give fair royalties to the state, Investor Daily reported on Friday.

Director General of Mineral and Coal at the Energy and Mineral Resources, Thamrin Sihite said in Jakarta on Thursday that the contracts awarded to foreign mining companies had caused disadvantages to the state because the royalties they paid were too small.

?The renegotiation will begin this year,? he said following a hearing with the Commission VII of the House of Representatives.

Besides reviewing the royalty payment, the renegotiation would also be held to ensure that all the mining contracts complied with the 2009 mining law, he said, adding that under the law, the mining companies should, for example, export their mine output in the form of processed products.

?It means that all the mining companies in the country should comply with such a law,? he added.

Coordinating Minister for the Economy Hatta Rajasa said earlier that the government planned to rearrange the royalty payment of foreign mining companies so that Indonesia would be able to receive the maximum benefits from its mining activities.

"At present, mining companies pay different rates of royalties ranging between 1.5 percent, 2 percent and 3.5 percent. We needed to standardize the royalty payment so mining companies will pay the royalty at the same rate,? he added.

But, he said the renegotiation would not violate the contracts already signed with the companies. (*)