Passage of mining bill likely to be delayed

Ika Krismantari, The Jakarta Post, Jakarta

The mining bill cannot be endorsed as scheduled as the government and legislators are still at loggerheads over the transitional arrangements, a source close to the negotiations says.

The transition period is a period granted to the holders of existing contracts of work (CoW) in order to allow them to switch to the new permit system stipulated under the bill.

The government has repeatedly said that it wants the bill passed into law by the end of this year in the hope of providing a clearer regulatory framework and greater certainty for firms wishing to invest in the mining sector next year.

However, R. Sukyar, a government representative involved in the drafting of the bill, said Tuesday that the debate on the transition period had become stalled in the working committee, with some lawmakers questioning whether other requirements set out in the bill would also be imposed on existing CoW holders.

"Those requirements include the obligation on miners to set up refineries or smelters in Indonesia, thus producing added value for the economy, rather than simply exporting the raw ores they produce," Sukyar told The Jakarta Post.

He said that he hoped the debate would be resolved as soon as possible, citing January as the most feasible deadline. "The sooner the better for us as it would be very good for investment."

Speaking on other provisions of the bill, Sukyar said that the committee had agreed on a number of pressing issues, including the introduction of a permit system under which a mining firm planning to establish a new business would be obliged to secure two mining permits -- exploration and exploitation -- from the local administration.

This provision had earlier drawn protests from the corporations as it will make the process of obtaining the licenses and other permissions more complex.

The committee then decided to insert a provision on special mining permits, which will be similar to the current contract of work (CoW) format, for big mining projects worth more than US$250 million.

Under the bill, the government will establish a special agency specifically tasked with issuing such permits.
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