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.
|
|
Sunday, 25 December 11
THERMAL COAL PRICES GAINED UP TO 4.32 PERCENT
COALspot.com - globalCOAL index gained 4.32 percent to US$106.36 per ton in RBCT, benchmark for South Asia and West Europe markets, for the week end ...
Saturday, 24 December 11
CHINAS LEVEL OF GROWTH TO DETERMINE COURSE OF DRY BULK MARKET IN 2012 SAYS SHIPBROKER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In its latest report, shipbroker Intermodal attempted to find a silver lining in the tough year that was 2011, as well as what one could expect from ...
Friday, 23 December 11
SPOT PACIFIC CAPESIZE VESSELS HAVE COMMANDED HIGH PREMIUMS - FEARNLEYS
Handy
Rates in the Atlantic kept stable from last week, with a touch of negativity closer to the end. Less spot cargoes seen, and owners are ...
Friday, 23 December 11
LANCO JOINS HANDS WITH BUKIT ASAM FOR INDONESIAN POWER PROJECT
COALspot.com - PT Tambang Batubara Bukit Asam, Indonesia's state owned coal miner and Indian based Lanco Infratech Ltd plans to build steam power p ...
Thursday, 22 December 11
RI WILL NOT PLAY CATCH-UP WITH GLOBAL COAL DEMAND - THE JAKARTA POST
The Jakarta Post reported that, the International Energy Agency (IEA) has predicted in its Coal Market Report 2011 that over the next five years, gl ...
|
|
|
Showing 4916 to 4920 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- The State Trading Corporation of India Ltd
- Rio Tinto Coal - Australia
- LBH Netherlands Bv - Netherlands
- GVK Power & Infra Limited - India
- Meenaskhi Energy Private Limited - India
- SMC Global Power, Philippines
- Bukit Baiduri Energy - Indonesia
- SMG Consultants - Indonesia
- Parry Sugars Refinery, India
- Price Waterhouse Coopers - Russia
- Trasteel International SA, Italy
- Semirara Mining Corp, Philippines
- Marubeni Corporation - India
- Barasentosa Lestari - Indonesia
- Standard Chartered Bank - UAE
- Cement Manufacturers Association - India
- White Energy Company Limited
- Iligan Light & Power Inc, Philippines
- Planning Commission, India
- Energy Link Ltd, New Zealand
- Romanian Commodities Exchange
- Larsen & Toubro Limited - India
- Tata Chemicals Ltd - India
- Posco Energy - South Korea
- Petron Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Interocean Group of Companies - India
- Bukit Makmur.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Kumho Petrochemical, South Korea
- Jaiprakash Power Ventures ltd
- Medco Energi Mining Internasional
- Semirara Mining and Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Independent Power Producers Association of India
- Maharashtra Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Formosa Plastics Group - Taiwan
- Kobexindo Tractors - Indoneisa
- Deloitte Consulting - India
- Siam City Cement - Thailand
- Coal and Oil Company - UAE
- CNBM International Corporation - China
- Vizag Seaport Private Limited - India
- Coalindo Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Xindia Steels Limited - India
- Electricity Generating Authority of Thailand
- Indian Oil Corporation Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Sojitz Corporation - Japan
- TeaM Sual Corporation - Philippines
- Eastern Energy - Thailand
- Thai Mozambique Logistica
- Bukit Asam (Persero) Tbk - Indonesia
- Wilmar Investment Holdings
- Orica Australia Pty. Ltd.
- Samtan Co., Ltd - South Korea
- Bhatia International Limited - India
- GAC Shipping (India) Pvt Ltd
- Neyveli Lignite Corporation Ltd, - India
- Petrochimia International Co. Ltd.- Taiwan
- Oldendorff Carriers - Singapore
- Holcim Trading Pte Ltd - Singapore
- Kalimantan Lumbung Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Port Waratah Coal Services - Australia
- PTC India Limited - India
- Maheswari Brothers Coal Limited - India
- Bharathi Cement Corporation - India
- Commonwealth Bank - Australia
- Orica Mining Services - Indonesia
- Simpson Spence & Young - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Electricity Authority - India
- Dalmia Cement Bharat India
- Energy Development Corp, Philippines
- Indika Energy - Indonesia
- Wood Mackenzie - Singapore
- Attock Cement Pakistan Limited
- Tamil Nadu electricity Board
- Thiess Contractors Indonesia
- International Coal Ventures Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Power Finance Corporation Ltd., India
- CIMB Investment Bank - Malaysia
- Krishnapatnam Port Company Ltd. - India
- McConnell Dowell - Australia
- Grasim Industreis Ltd - India
- Bulk Trading Sa - Switzerland
- Intertek Mineral Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- Borneo Indobara - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Ministry of Finance - Indonesia
- Karaikal Port Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Heidelberg Cement - Germany
- Kepco SPC Power Corporation, Philippines
- The University of Queensland
- Bangladesh Power Developement Board
- Ind-Barath Power Infra Limited - India
- Latin American Coal - Colombia
- Ministry of Mines - Canada
- Merrill Lynch Commodities Europe
- Manunggal Multi Energi - Indonesia
- Antam Resourcindo - Indonesia
- Therma Luzon, Inc, Philippines
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- Bhoruka Overseas - Indonesia
- Banpu Public Company Limited - Thailand
- Bhushan Steel Limited - India
- Pendopo Energi Batubara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Lanco Infratech Ltd - India
- Edison Trading Spa - Italy
- Metalloyd Limited - United Kingdom
- Global Business Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Cigading International Bulk Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Aboitiz Power Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Parliament of New Zealand
- Gujarat Sidhee Cement - India
- Aditya Birla Group - India
- Makarim & Taira - Indonesia
- Mercuria Energy - Indonesia
- Siam City Cement PLC, Thailand
- Eastern Coal Council - USA
- VISA Power Limited - India
- Videocon Industries ltd - India
- Sinarmas Energy and Mining - Indonesia
- Star Paper Mills Limited - India
- Agrawal Coal Company - India
- Electricity Authority, New Zealand
- Directorate Of Revenue Intelligence - India
- OPG Power Generation Pvt Ltd - India
- Mjunction Services Limited - India
- Ceylon Electricity Board - Sri Lanka
- Asmin Koalindo Tuhup - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Goldman Sachs - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Ambuja Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Minerals Council of Australia
- Ministry of Transport, Egypt
- Chamber of Mines of South Africa
- Sakthi Sugars Limited - India
- Sindya Power Generating Company Private Ltd
- Baramulti Group, Indonesia
- Timah Investasi Mineral - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Kaltim Prima Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- ASAPP Information Group - India
- India Bulls Power Limited - India
- Central Java Power - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Meralco Power Generation, Philippines
- Australian Commodity Traders Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Savvy Resources Ltd - HongKong
- Madhucon Powers Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Uttam Galva Steels Limited - India
- Vedanta Resources Plc - India
- Riau Bara Harum - Indonesia
- The Treasury - Australian Government
- Indian Energy Exchange, India
- Indonesian Coal Mining Association
- Mercator Lines Limited - India
- Carbofer General Trading SA - India
- PNOC Exploration Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Altura Mining Limited, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- IEA Clean Coal Centre - UK
- Straits Asia Resources Limited - Singapore
- Sarangani Energy Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Economic Council, Georgia
- London Commodity Brokers - England
- Salva Resources Pvt Ltd - India
- New Zealand Coal & Carbon
- Malabar Cements Ltd - India
- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- San Jose City I Power Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Binh Thuan Hamico - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- Australian Coal Association
- GMR Energy Limited - India
- Coastal Gujarat Power Limited - India
- MS Steel International - UAE
- Georgia Ports Authority, United States
- Indogreen Group - Indonesia
- Singapore Mercantile Exchange
- ICICI Bank Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Renaissance Capital - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Mintek Dendrill Indonesia
|
| |
| |
|
