Govt to put mining rights out to tender under law

Ika Krismantari, The Jakarta Post, Jakarta

The government will use a tender process, rather than the existing direct-appointment mechanism, to award the mining permits that will be issued under the proposed new mining law.

The Energy and Mineral Resources Ministry's director general of geology and mineral resources, Simon Sembiring, said in a presentation to a seminar Wednesday that the government, based on the mining bill (currently still under deliberation in the House of Representatives), will in future put mining concessions out to tender.

"You may submit your bids in line with the preliminary data for a mining concession issued by my ministry. We will also give you time to conduct due diligence before submitting your bids," Simon told investors attending the seminar, titled "Indonesian Natural Resources Development: Future of Oil, Gas and Mining."

Simon said that local administrations, with the help of the central government, would first determine potential mining zones in their respective provinces before concessions were put out to tender.

He said that the delineation of mining zones was needed to provide clarity to investors on the licensing process, and avoid misunderstandings.

"If a mining area is located in a regency, then the permit will be issued by the regent. If it sits astride more than one regency, then it will be issued by the provincial government, and if it is located in more than one province, it will be issued by the central government," Simon explained.

The government and the House recently agreed on three types of mining permit in the bill. The first one is a social mining permit, which will be granted to small-scale mining ventures operated by local people, the second is the mining operation permit, which may be issued to both local and foreign mining firms, while the third is called a special mining permit, which may be issued to both local and foreign firms wishing to develop mining areas located in mining reserve areas.

Simon said that as soon as the law was enacted, the government would designated reserve areas for strategic minerals such as nickel, tin, copper and bauxite.

The establishment of mining reserves is needed to ensure the sustainability of the mining projects and ancillary processing plants, he said.

The central government, through a special agency, will control the reserve areas and will be responsible for issuing permits. In these special areas, the licenses will be referred to as mining operation agreements, which will basically function in a similar way to the existing Contract of Work arrangements.

Simon added that the government intended to issue ancillary regulations setting out the rules for the holding of tenders.
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