Coal Mining Companies Agree to Limit Mining Areas

TEMPO.CO, Jakarta - Ten coal mining work contract (PKP2B) holders have agreed to all amendments set forth in their PKP2B. The amendments were made to adjust the contract with the Mineral and Coal Mining Law. The Energy and Mineral Resources (ESDM) Ministry claimed that the amendment would boost state revenue up to nine percent.

"The amendment was based on a discussion between the ten companies, the ESDM Ministry, local government, House of Representatives Commission VII, and the Investment Coordinating Board (BKPM)," Bambang Gatot Ariyono, the director general of mineral and coal at the ESDM Ministry, said on Wednesday, August 5, 2015.

Bambang added, 21 out of 31 articles in the contract were amended particularly those related to the limitation of mining areas, the continuation of mining operation, state revenue, the obligation of processing and refining in the country's smelters, divestment obligations, as well as the obligations of the use of domestic goods and services.

According to Gatot, the additional state revenue comes from 13.5 percent of coal production fund (DHPB) agreed by each company. However, he refused to provide the exact figure.

In addition, the amendment would result in limitations of operational areas. ESDM Minister Sudirman Said explained that the move was aimed at developing sustainable coal mining.

“We don’t have much [coal] potential. But we become the largest coal importer. That’s why we need further regulation,” Sudirman said.

Sudirman added the mineral and coal industry must be operated by companies willing to make long-term investments, instead of hit-and-run business owners.

To this date, the government is still negotiating contract amendments with 34 mining contract holders. The process is expected to be completed in October this year.

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