Govt to prohibit contract holders to sell contract area before production

The government would introduce clause in the forthcoming coal or mineral Contract of Work (CoW) that would prohibit contract holder to sell its concession before the mine reaches production stage.

Director of Coal and Mineral at the Ministry of Energy and Mineral Resources MS Marpaung said on Tuesday that the clause would first be applied in Rio Tinto?s La Sampala nickel CoW in Sulawesi island that is expected to signed in September.

?With this clause in effect, contract holders (which sign CoW in 2006 afterwards) can not sell their contract areas to another party during exploration stage. This is in line with the government?s principle that the CoW area is given to be explored and produced by the contract holder,? said Marpaung.

Rio Tinto and the government are currently negotiating CoW terms on la Sampala nickel prospect, which is located in the border of South and Central Sulawesi provinces. Director General of Mineral and Coal Resources Simon Sembiring said that Rio Tinto would invest US$2 billion in the project. Sembiring said the contract would be signed for 30 years. He said that all related governmental agencies had given their approval on the CoW terms except for taxation terms. (godang)