IMA urges govt to control mine licensing

Mining companies have strongly urged the government to drop a provision from the proposed mining law that would allow local administrations to issue mining licenses. Jakarta Post reported Tuesday.

They also called on the government to remove another provision requiring mining companies to set up complete upstream-to-downstream processing plants, given the massive expense involved.

Expressing their concerns on the new mining bill currently being deliberated by the House of Representatives, the mining companies said that the central government should continue to take charge of the issuing of mining licenses.

They said that giving local administrations the power to issue mining permits would only lead to a lack of legal certainty for investors.

?What if mayors or regents are replaced, who would then guarantee our licenses?? Indonesian Mining Association (IMA) vice chairman Darma Ambiar said during a seminar here Monday, citing the notorious reputation of the Indonesian bureaucracy.

?It would be better if the central government continued to take charge,? Darma said.

The IMA hopes that in addition to retaining licensing powers, the central government will also annul all local ordinances deemed to be discouraging new investors.

Since November 2006, the central government has annulled 506 ordinances, revised 148 ordinances, and is currently planning to annul another 804 ordinances, mostly imposing local taxes and levies that conflict with higher regulations.

Darma admitted that the idea of retaining the centralized licensing system represented a compromise offered by the IMA to end the disagreement between regulators and industry players arising out of the bill.

Investors and legislators have been at odds over the pressing issue of licenses versus contracts to be awarded to companies that wish extract mineral resources.

Intended to replace the 1967 Basic Mining Law, the government-sponsored bill seeks to replace the current ?contract of work? system, which is considered to be one of the best mining-license systems in the world, with exploration and production permits to be awarded by local administrations.

The IMA is also urging the government to reconsider the provision of the bill that will require investors in the sector to establish complete upstream-to-downstream processing facilities, saying that this would be much too costly for investors. (*)