Strike Resources: Indonesian mining law update
Monday, February 1 2010 - 03:03 AM WIB
A new Mining Law took effect in Indonesia in January 2009. The operation of this law is to be clarified by implementing regulations. The regulations were due to be issued by January 2010. The Indonesian Government has commenced issuing the regulations in instalments. Only two instalments have been issued to date.
The first instalment, amongst other things, prohibits a concession owner from receiving fees for work performed by a mining services company and may prevent concession owners from contracting out certain aspects of their mining and processing activities. The precise effect of the first instalment of the regulations is uncertain in the absence of the release of the full implementing regulations.
The first instalment has created a degree of uncertainty with respect to Strike?s obligations to carry out certain aspects of mining operations and make payments to the Berau concession owner under the Co-operation Agreement between the Company and that owner.
After reviewing and taking advice on these matters, Strike and the concession owner have began discussions about potential amendments to the contractual arrangements between them to ensure that they remain consistent with the New Mining Regulations as they are released, whilst preserving the economic substance of their original agreement.
These discussions are ongoing but do require the release of the full regulations so that the relationship between the parties can be adjusted to accord with a final position under the new Mining Law. Both parties await the release of the final regulations so that adjustments can be made to their contractual relationship. The concession owner is obligated to accommodate any changes in the law. Whilst Strike is proceeding on an operational basis towards mine commencement, awaiting the issue of the new Mining Regulations has resulted in an overall delay to Strike?s project commencement timetable. (end of excerpt)