We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Friday, 23 December 11
CONTENTIOUS ISSUES IN CONTRACT RENEGOTIATION - THE JAKARTA POST
 The government has been renegotiating mining contracts, especially those 30-40 years old, with almost all mining companies, including PT Freeport Indonesia, which has been operating since 1967. This is a major step the government is taking and of course will affect the climate of mining investment in the future. If not carefully planned and executed, renegotiation might severely harm the prospects of the national mining industry.
That is why it is important for the government to choose the most important points to be brought to the negotiating table and to ensure that the results are beneficial to both sides, i.e., the mining enterprises and the government.
The basis for renegotiation is Law No. 4 /2009 on mining, which has changed the mining-concession regime by introducing a new licensing system. The law replaces mining authorizations (Kuasa Pertambangan or KP) as well as contracts of work (CoWs) and contracts of coal mining work (CCoW or PKP2B). The government acknowledges all CoWs/CCoWs that have been awarded before the law was promulgated; however all CoWs/CCoWs still need to be renegotiated.
The fundamental difference between the concession and licensing regimes lies in a number of points. Most important is the difference in the legal nature. While concession is based on civil law and the source of law is the agreement itself, licensing is public and legislation is the source of law. The application of a “concession” is the agreement between the two parties, the mining enterprises and the government, while a “license” is based on permission from the government.
In terms of rights and obligations, a licensing regime puts the government in a more dominant position. Settlement of disputes is through international arbitration for concession agreements but is via a state administrative court for licensing regimes.
These differences, of course, will be perceived differently by different mining enterprises. Large-scale mining companies and international enterprises prefer arbitration as a legal option, because arbitration is considered to be more fair and free from political intervention. Given that perception, the new regime is seen to generate potentially larger political risks.
Moreover, the bilateral nature of the contract system is believed to provide more protection against future changes in the law than a unilateral licensing system.
For small or national mining companies, however, licensing regimes might be seen to be friendlier as they provide equal opportunities to both domestic and foreign investors in applying for licenses.
Renegotiation is needed to adjust the content of contracts, which have been running since before the Mining Law came into being. These contracts need to be adapted to be in accordance with the new law. Renegotiation began in the fourth quarter of 2009 for CoWs and early 2010 for CCoWs.
Philosophically, however, renegotiation aims at restoring the country’s sovereignty over its natural resources as well as providing a better use of the resources for the people. This is reflected in a number of articles to adjust CoWs and CCoWs, to increase the added value for minerals and coal by imposing an obligation on contractors to establish downstream industrial facilities, to enhance state revenue through rate adjustments for royalties and production fees and to prioritize the use of local and national services.
Based on the notion of providing a better use of resources, a number of strategic issues are being brought to the negotiation table, such as the limitation of mining areas, contract extension, state revenue, divestment obligations for foreign investors that hold full-ownership in local mining firms, the obligation of processing and refining in the country’s smelters, as well as the obligations of the use of domestic goods and services.
As expected, the most prominent issue during the renegotiation is about the augmented state revenue — the first contentious issue. State revenue refers to mining taxes and profit-sharing schemes. The government is tightening tax regulations to enhance national revenue. This is the reason why the tax authority is involved in the renegotiation and assesses whether or not an enterprise is losing money.
Renegotiation on profit-sharing might not be necessary with those enterprises that are losing money. But the key point here is transparency — the enterprises must reveal their income — as the fundamental purpose of the renegotiation is for the results to be fair and transparent.
The limitation of mining areas is the second contentious issue. According to the law, all areas of work that exceed the maximum limit of 100,000 hectares (ha) for minerals and 50,000 ha for coal should be returned to the state. This has proven to be difficult, since most of the large mining enterprises have been working areas beyond this threshold. Freeport has a working area of up to 1.8 million ha, and Arutmin about 70,000 ha, and Inco about 180,000 ha.
The third contentious issue is extension of concession contracts. A concession contract is terminated when it expires. After that, the management must submit to the state, represented by state or local enterprises, a proposal to obtain a new mining license. Contract extension with the old contractor can be achieved only if the contractor is a minority shareholder.
These three issues are problems for both the government and the enterprises to resolve. Currently, there are about 113 plans to renegotiate mining contracts, of which 37 CoWs are in the mining of metals and minerals and 76 are contracts of coal mining work (CCoWs). The majority of the mining enterprises seem to be in the “Partially Agree” mode for CoWs and in the “Agree to All Amendment Articles” mode for CCoWS.
The results must be beneficial to both sides, promoting transparency and fairness. Mining has been contributing greatly to the country’s economy, as well as wealth to a number of mining enterprises. In 2010, mining accounted for about 11.15 percent of GDP for Indonesia overall, and a much higher percentage for provinces such as Papua, Bangka-Belitung, West Nusa Tenggara and East Kalimantan. Mining also accounted for 16.91 percent of Indonesian exports, providing Rp 9.7 trillion of government revenue.
But annual average mining investment is not growing as expected. Only in the coal sector has any large-scale new production capacity been developed in recent years. The vast majority of the investment is for the replacement of mining infrastructure to sustain capacity.
Given the long lead times to find and develop new mines, production declines will be inevitable unless the renegotiation can enhance transparency and the mining policy environment is improved.
We have to remember that the country has some of the most prospective geological areas and according to one international survey, only some areas of Canada and Australia have better mineral prospects. Thus, it is possible for mining to make a much larger economic contribution at the local, provincial and national levels.
The renegotiation process cannot be allowed to hinder this contribution. We have to avoid losing our competitiveness at a time when other countries are seeking new mining investment.
By: Montty Girianna
Source: The Jakarta Post
The writer is director for energy, mineral resources and mining at the National Development Planning Agency (BAPPENAS).
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Wednesday, 11 January 12
NEWBUILDING ORDERS DECLINE, AS SHIP OWNERS REALIZE OVERSUPPLY WILL "KILL" THEM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With 2012 now underway, it will be rather interesting to see how ship owners will play the "newbuilding ordering" card to their favor, as ...
Tuesday, 10 January 12
THE 4TH DEEPWATER ASIA CONGRESS 2012 WILL KICK OFF ON MAY 23 - 25
Press release - Based on the past three years’ success, SZ & W Group is excited to announce the 4th Deepwater Asia Congress will be held o ...
Monday, 09 January 12
2012: WHAT WILL IT BRING FOR THE DRY BULK MARKET? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
A further increase in dry bulk demand could be the remedy for most of the industry's oversupply issues, together of course with the high level of s ...
Sunday, 08 January 12
ICICI OUTLOOK ON INDIAN POWER, MINING,CEMENT, AND SHIPPING SECTORS PERFORMANCE IN 2012
Broking firm, ICICIdirect (India) has come out with report on sectors outlook for 2012. IRIS has collated key highlights for each sector from ...
Sunday, 08 January 12
SUPRAMAX DELIVERY SOUTH CHINA FOR TRIPS VIA INDONESIA WERE REPORTED AROUND $ 7000 PER DAY - VISTAAR
Wish You a Very Happy and Prosperous New year 2012.
COALspot.com - The last report by us was on 16th Dec 2011 and because of holidays this would ...
|
|
|
Showing 4891 to 4895 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Essar Steel Hazira Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Medco Energi Mining Internasional
- Altura Mining Limited, Indonesia
- Parry Sugars Refinery, India
- Iligan Light & Power Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Aditya Birla Group - India
- Rashtriya Ispat Nigam Limited - India
- TeaM Sual Corporation - Philippines
- Ambuja Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Coal Association
- Mintek Dendrill Indonesia
- Globalindo Alam Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Standard Chartered Bank - UAE
- Jaiprakash Power Ventures ltd
- Kobexindo Tractors - Indoneisa
- Intertek Mineral Services - Indonesia
- Antam Resourcindo - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meralco Power Generation, Philippines
- Goldman Sachs - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Oldendorff Carriers - Singapore
- Romanian Commodities Exchange
- GVK Power & Infra Limited - India
- Star Paper Mills Limited - India
- Global Business Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Energy Development Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Agrawal Coal Company - India
- Orica Mining Services - Indonesia
- Central Electricity Authority - India
- Wilmar Investment Holdings
- Indogreen Group - Indonesia
- Electricity Generating Authority of Thailand
- Gujarat Mineral Development Corp Ltd - India
- Cigading International Bulk Terminal - Indonesia
- PowerSource Philippines DevCo
- Merrill Lynch Commodities Europe
- Deloitte Consulting - India
- The State Trading Corporation of India Ltd
- Renaissance Capital - South Africa
- Anglo American - United Kingdom
- Larsen & Toubro Limited - India
- Vedanta Resources Plc - India
- Kaltim Prima Coal - Indonesia
- SMG Consultants - Indonesia
- Maheswari Brothers Coal Limited - India
- Gujarat Electricity Regulatory Commission - India
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Makarim & Taira - Indonesia
- Binh Thuan Hamico - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- Africa Commodities Group - South Africa
- OPG Power Generation Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Bhushan Steel Limited - India
- Alfred C Toepfer International GmbH - Germany
- Sakthi Sugars Limited - India
- MS Steel International - UAE
- Sical Logistics Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Port Waratah Coal Services - Australia
- McConnell Dowell - Australia
- PTC India Limited - India
- Indian Oil Corporation Limited
- SMC Global Power, Philippines
- Coastal Gujarat Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- India Bulls Power Limited - India
- VISA Power Limited - India
- Directorate Of Revenue Intelligence - India
- Rio Tinto Coal - Australia
- Heidelberg Cement - Germany
- Krishnapatnam Port Company Ltd. - India
- Wood Mackenzie - Singapore
- Bharathi Cement Corporation - India
- Riau Bara Harum - Indonesia
- Indika Energy - Indonesia
- Kumho Petrochemical, South Korea
- Gujarat Sidhee Cement - India
- Trasteel International SA, Italy
- Bahari Cakrawala Sebuku - Indonesia
- Billiton Holdings Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Coal Council - USA
- Australian Commodity Traders Exchange
- CNBM International Corporation - China
- Price Waterhouse Coopers - Russia
- Electricity Authority, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- CIMB Investment Bank - Malaysia
- Edison Trading Spa - Italy
- Kideco Jaya Agung - Indonesia
- ICICI Bank Limited - India
- Savvy Resources Ltd - HongKong
- Aboitiz Power Corporation - Philippines
- London Commodity Brokers - England
- Borneo Indobara - Indonesia
- Interocean Group of Companies - India
- GAC Shipping (India) Pvt Ltd
- Independent Power Producers Association of India
- Singapore Mercantile Exchange
- Straits Asia Resources Limited - Singapore
- Grasim Industreis Ltd - India
- International Coal Ventures Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Latin American Coal - Colombia
- Uttam Galva Steels Limited - India
- New Zealand Coal & Carbon
- Petrochimia International Co. Ltd.- Taiwan
- Toyota Tsusho Corporation, Japan
- Metalloyd Limited - United Kingdom
- LBH Netherlands Bv - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Bhatia International Limited - India
- IHS Mccloskey Coal Group - USA
- Siam City Cement - Thailand
- Economic Council, Georgia
- Malabar Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Attock Cement Pakistan Limited
- Energy Link Ltd, New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Transport, Egypt
- The University of Queensland
- Ind-Barath Power Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Coalindo Energy - Indonesia
- Videocon Industries ltd - India
- Bukit Baiduri Energy - Indonesia
- Bangladesh Power Developement Board
- Petron Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Tamil Nadu electricity Board
- Siam City Cement PLC, Thailand
- Mjunction Services Limited - India
- Madhucon Powers Ltd - India
- Manunggal Multi Energi - Indonesia
- White Energy Company Limited
- PetroVietnam Power Coal Import and Supply Company
- Indo Tambangraya Megah - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Therma Luzon, Inc, Philippines
- Cement Manufacturers Association - India
- Indonesian Coal Mining Association
- Formosa Plastics Group - Taiwan
- South Luzon Thermal Energy Corporation
- PNOC Exploration Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Ministry of Mines - Canada
- Kepco SPC Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Bulk Trading Sa - Switzerland
- Dalmia Cement Bharat India
- Chamber of Mines of South Africa
- Pendopo Energi Batubara - Indonesia
- Minerals Council of Australia
- Sojitz Corporation - Japan
- Jorong Barutama Greston.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- Xindia Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Carbofer General Trading SA - India
- Planning Commission, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Timah Investasi Mineral - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- The Treasury - Australian Government
- IEA Clean Coal Centre - UK
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Samtan Co., Ltd - South Korea
- Posco Energy - South Korea
- Chettinad Cement Corporation Ltd - India
- Mercuria Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Banpu Public Company Limited - Thailand
- Thai Mozambique Logistica
- Meenaskhi Energy Private Limited - India
- Tata Chemicals Ltd - India
- Barasentosa Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Thiess Contractors Indonesia
- Lanco Infratech Ltd - India
- Georgia Ports Authority, United States
- Global Green Power PLC Corporation, Philippines
- Marubeni Corporation - India
- Jindal Steel & Power Ltd - India
- Vizag Seaport Private Limited - India
- Coal and Oil Company - UAE
- Parliament of New Zealand
- GMR Energy Limited - India
- Central Java Power - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Ministry of Finance - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Sarangani Energy Corporation, Philippines
- Indian Energy Exchange, India
- Baramulti Group, Indonesia
- Eastern Energy - Thailand
- Mercator Lines Limited - India
- Commonwealth Bank - Australia
- ASAPP Information Group - India
- Orica Australia Pty. Ltd.
|
| |
| |
|
