Mining firms told to be more flexible

Mining companies should be more flexible in facing vocal and often demanding provincial administrations, the director general of general mining at the Ministry of Mines and Energy Surna Tjahja Djajadiningrat said here on Thursday.

Speaking at a business luncheon held by the Indonesian Australian Business Council (IABC) on Wednesday, Surna said that the mining companies should be able to make a compromise and be willing to listen to aspirations of the regions to avoid conflicts with the local governments, The Jakarta Post reported.

Surna acknowledged the importance of legal certainties in the mining industry, but added that they should not hinder options of win-win solutions.

He cited the recent Newmont case as an example. Surna said both parties, the Minahasa regency and gold mining company PT Newmont Minahasa Raya, had to make compromises to reach an amiable solution.

The Minahasa administration filed a legal suit against the Colorado-based mining company after the later refused to pay a local tax.

Newmont said that the tax imposed by the local government on the Category C mineral deposits such as stones, sand and gravel was not stated in the contract. The local court ordered the closure of Newmont's mining operation but it was later canceled due to intervention from the Supreme Court in Jakarta. The administration then dropped the case after Newmont agreed to pay a portion of the disputed tax.

Many other mining companies, however, are still wrestling with demands made by regions on taxes, environmental issues and land concessions. (*)