Mining firms should provide security for rehabilitation project

Mining companies will be required to provide security funds for the rehabilitation of the mining projects under the new regulation which will be soon issued by the government, Bisnis Indonesia reported on Thursday.

The security could be made in the form of bank?s time deposit, third party?s guarantee or reserve funds allocated in a company?s balance sheet. The guarantee is needed to ensure that the mining companies will be responsible to finance all the rehabilitation projects after the closure of their mining activities.

The guarantee funds or the security should be provided before a mining company intends to close their mining areas. They could not be withdrawn until all the rehabilitation works of the mining areas are completed.

The time deposit should be placed in a state owned bank or a branch of a foreign bank under the name of minister, governor, regent or mayor depending on their authority. The time deposit could be gradually withdrawn in accordance with the stage of the rehabilitation works.

A company is allowed to allocate reserve funds in its balance sheet as the guarantee for its rehabilitation project if the company has a paid-up capital of at least US$100 million. The value of the security or guarantee should be equal to the total amount of funds needed to finance rehabilitation projects. (*)