Mining contract renegotiation turns into deadlock

The lengthy negotiation process between the government and mining companies operating in the country to amend their mining contracts to comply with the terms set in the 2009 Mining Law has reached a deadlock, according to a senior government official.

Bisnis Indonesia quoted Heriyanto, Head of the Legal Division at the Directorate General of Mineral and Coal of the Ministry of Energy and Mineral Resources, as saying that there has been no progress at all in the mining contract renegotiation process, and that it could no longer be continued.

?Today, it (renegotiation process) has reached a deadlock. It?s what happening at us (directorate general of mineral and coal) now,? he said, adding that miners could not reach agreement particularly on two key issues including on state revenue and obligation to set up downstream operation.

Under the proposed amendment of the mining contracts including coal contracts of work (or PKP2B) and mining contracts of work (or KK), the government is seeking to obtain greater revenue such as through higher royalty tariff.

Of the 34 mineral mining companies holding the KK, only 10 have signed mining contract amendment, while of the 73 coal miners holding the PKP2B, only 22 have amended their contracts.

Coal giants PT Adaro Energy Tbk and PT Arutmin Indonesia claimed on June 9 as reported by this portal that they have reached agreement with the government on the proposed changes to their coal contracts of work, and are set to sign the contract amendment soon.

Meanwhile, spokesman of the Ministry of Energy and Mineral Resources Sujatmiko was quoted by Kontan as saying Friday that two PKP2B coal miners PT Kendilo Coal Indonesia and PT Intitirta Primasakti were ready to soon sign amendment to their contracts. (*)