Indonesian parliament approves new mining bill

Indonesia FlagJakarta - The Indonesian parliament on Tuesday passed a new law on coal and mining that is expected to pave the way of international mining companies to exploit its mineral resources.

The endorsement of the Bill on Minerals and Coal Mining ending three years of deliberation at parliament, sometimes exacerbated by quarreling among lawmakers, but sparked uncertainty among miners.

Muhaimin Iskandar, deputy speaker of the House of Representatives, confirmed that the bill was passed despite objections from certain factions.

Under the new law, which replaces a mining law dating back to 1967, investors will be required to process all mining products into metal locally, whether by setting up their own smelters or by using others, a requirement investors fear would raise investment costs.

The new law also includes a provision to ban exporting ore after five years, raising costs for investors in the industry.

Under the new regulation, the existing contract are upheld, but holders have one year once their contracts expire to comply with the new system. For mining companies operating smelters, the transition period is five years.

According to the new law, mining companies operating in so-called state reserve areas must allocate 10 per cent of their net profits to the government, 4 per cent of which will go to the central government and 6 per cent to the local administrations.

A reserve area contains protected strategic mineral reserves, including tin, coal, gold and nickel.

Businessmen in the mining sector said the new law would jeopardize the mining industry, arguing that the bill is not investor-friendly due to contentious items such as the elimination of the current licensing via a contract of work to replace it with mining permits running for shorter periods.

In the past decade, foreign investors have made no major mining investments in Indonesia because of the regulatory limbo. (dpa)

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