Review on mining contracts inflict great loss to provinces

The government?s plan to review mining contracts which overlap protected forests will not only inflict a serious loss to natural resources-based provinces but also will damage the investment climate, according to the Indonesian Mining Association?s executive director Paul Louis Coutrier.

Coutrier said that the government should be consistent with the contracts that have been signed with mining companies. ?If the government does not honor the contracts, it will damage the investors? confidence. As the consequence, many mining firms will pull out their investment from Indonesia,? he was quoted as saying by Bisnis Indonesia on Tuesday.

According to Coutrier, if mining companies withdrew their investments, natural resources-based provinces would suffer the most. It will not only hurt the provinces? sources of revenues but also cause unemployment problem, he added.

According to data provided by the committee for the monitoring of autonomy law, mining royalties in the regency of Fakfak in Irian Jaya reaches about Rp 4.85 trillion or about 95 percent of the regency?s total revenues. The mining sector contributes about 60 percent of Muara Enim?s revenue.

At least 150 mining projects with total investment of about US$3.2 billion might be suspended as they could violate the new Forestry Law which prohibits open-mining activities on protected forests. Of the total, 116 projects are still on exploration stage, 34 projects have been engaged in production, while their contribution to the state reaches $964 million.

The Ministry of Energy and Mineral Resources has asked the Cabinet to amend the law so that the companies, which received their licenses before the issuance of the law last year could be exempted. But the Ministry of Forestry oppose the amendment of the law, saying that the law should be fully enforce the protect the environment.(*)