Key points in Indonesia’s new mining law
An Indonesian parliamentary working committee has agreed to pass a long-delayed bill on mining and coal.
Parliament is due to hold a plenary hearing on December 16, when it is expected to pass the bill.
Below are key points in the new bill.
-Types of mining permits.
1. The Energy and Mines minister will issue a special mining permit for production of mineral or coal from state reserves (specific areas set aside by the government for future exploitation).
2. Permits for small miners with a maximum area of 25 hectares (61.8 acres) will be issued by a local regent (mayor). The permit will be effective for a maximum period of five years.
3. Permits for mining in areas not designated as state reserves consist of an exploration and production permit.
Exploration permits for metal mining will be effective for a maximum period of 8 years, a maximum 3 years for non-metal mining and a maximum of 7 years for coal exploration.
Production permits for metal mining will be effective for a maximum of 20 years and can be extended for another 20 years.
For non-metal mining (for example diamonds or sand), production permits will be effective for a maximum of 10 years and can be extended by up to 10 years.
Permits for production of coal will be effective for up to 20 years and can be extended for up to 20 years.
Permits for metal mining and coal mining will be awarded by tender while permits for non-metal mining will be awarded after investors submit requests for mining areas.
The regent or mayor will issue the permit if the mining area is in one regency or city while the permit will be issued by a provincial governor if it crosses several local districts.
For mining areas covering more than one province, permits will be issued by the energy and mines minister.
-Metal and coal mining firms should allocate 4% of net profit after they start production to the central government and 6% to regional government, on top of other taxes.
-If local governments violate the law, the central government can temporarily suspend operations or revoke mining permits.
-Illegal mining carries a maximum jail sentence of 10 years and a maximum fine of 10 billion rupiah (US$907,000).
-government officials who violate the mining law and abuse authority when issuing permits face a maximum 2 years in jail and a maximum 200 million rupiah fine.
-Mining firms must smelt and refine metals in domestically but holders of existing mining contracts are given a transitional period of up to five years after the law is passed.
-Mining firms can send the raw material to be processed by independent smelters
-Existing mining and coal contracts will be effective until the contract expires but some provisions should be adjusted to fit in with the new law within a year after the law is passed.
Category: ResourceAsia
