Ministry urges miners to pay reclamation funds

The Ministry of Energy and Mineral Resources has warned miners particularly those holding the so-called IUP mining business licenses to pay reclamation and post-mining funds or risked their licenses revoked, Kontan reported Thursday.

The paper quoted Director General of Mineral and Coal at the ministry Bambang Gatot Ariyono as saying that compliance by the IUP miners in paying the reclamation and post-mining funds has been quite low at around 40 percent of the total IUP miners.

Speaking at a hearing with the House of Representatives Commission VII on mining and energy Wednesday, Bambang said that those failing to pay the required funds will be assign default status. ?If we have given time (to pay the funds), but fail to fulfill it, they (the licenses) will be terminated,? he said.

He said that in contrast, compliance by larger coal mining firms holding the coal contract of work (or PKP2B) and mineral mining firms holding the mining contract of work (KK) has been quite good. In terms of reclamation funds obligation, compliance by PKP2B miners has reached 84 percent, while KK miners 88 percent. In terms of post-mining funds, compliance by PKP2B miners has reached 68 percent, while KK miners 83 percent.

According to existing Minister of Energy and Mineral Resources Regulation No 7/2014, miners are required to deposit reclamation funds into an escrow account for five years, and must be made in one payment.

Executive Director of the Indonesia Coal Mining Association, Hendra Sinadia said that the weak commodity price environment is one of the reasons for the low compliance. He added that the requirement to deposit the funds for five years in advance will also create heavy financial burden to the mining firms, aside from the fact that miners actually revises their mining plans every year. (*)