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.
|
|
Monday, 05 December 11
SGX LAUNCHED IHS MCCLOSKEY/XINHUA INFOLINK OTC CFR SOUTH CHINA COAL CONTRACT TODAY
COALspot.com - In order to meet the demand of the coal industry for an effective coal hedging tool with counterparty credit risk mitigation facility ...
Monday, 05 December 11
DRY BULK RATES LOOKING TO EXTEND GAINS THIS WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Capesize dry bulk carrier owners have had a great week, with rates rising for six straight sessions (including the end of the week before that). As ...
Sunday, 04 December 11
SUPRAMAX TRIPS VIA INDONESIA WERE REPORTED AROUND $ 7500 - 8000 PD
COALspot.com - The BDI and Cape index recovered this week. The BDI was up by 3.26 pct and Cape index saw a big jump and closed at 3409 points (up by ...
Saturday, 03 December 11
BORNEO TO SPEND US$600 MIO CAPEX - INSIDER STORIES
Insider Stories reported that, Coking coal miner PT Borneo Lumbung Energi & Metal Tbk (BORN) plans to spend US$600 million capital expenditure ( ...
Friday, 02 December 11
DRY BULK CARRIERS BACK IN THE SPOTLIGHT AS MARKET SPEEDS UP - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the tanker and container markets suffering dearly, it seems that the tide has once again turned in favor of the dry bulk carriers, despite over ...
|
|
|
Showing 4946 to 4950 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Siam City Cement - Thailand
- Salva Resources Pvt Ltd - India
- Bangladesh Power Developement Board
- Global Business Power Corporation, Philippines
- Eastern Coal Council - USA
- White Energy Company Limited
- Asmin Koalindo Tuhup - Indonesia
- Georgia Ports Authority, United States
- Independent Power Producers Association of India
- Siam City Cement PLC, Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Edison Trading Spa - Italy
- Iligan Light & Power Inc, Philippines
- Aditya Birla Group - India
- Intertek Mineral Services - Indonesia
- Essar Steel Hazira Ltd - India
- Romanian Commodities Exchange
- OPG Power Generation Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Electricity Generating Authority of Thailand
- AsiaOL BioFuels Corp., Philippines
- Kobexindo Tractors - Indoneisa
- Africa Commodities Group - South Africa
- Global Coal Blending Company Limited - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ICICI Bank Limited - India
- International Coal Ventures Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Bayan Resources Tbk. - Indonesia
- Meralco Power Generation, Philippines
- Samtan Co., Ltd - South Korea
- McConnell Dowell - Australia
- Straits Asia Resources Limited - Singapore
- Indo Tambangraya Megah - Indonesia
- Bukit Makmur.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- ASAPP Information Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- European Bulk Services B.V. - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Kartika Selabumi Mining - Indonesia
- Central Electricity Authority - India
- Deloitte Consulting - India
- Mercuria Energy - Indonesia
- SMC Global Power, Philippines
- Anglo American - United Kingdom
- Electricity Authority, New Zealand
- Billiton Holdings Pty Ltd - Australia
- Sojitz Corporation - Japan
- SN Aboitiz Power Inc, Philippines
- Commonwealth Bank - Australia
- LBH Netherlands Bv - Netherlands
- The State Trading Corporation of India Ltd
- GVK Power & Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bhoruka Overseas - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Sakthi Sugars Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Mjunction Services Limited - India
- Jaiprakash Power Ventures ltd
- Global Green Power PLC Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Chamber of Mines of South Africa
- Indogreen Group - Indonesia
- Aboitiz Power Corporation - Philippines
- Trasteel International SA, Italy
- India Bulls Power Limited - India
- Banpu Public Company Limited - Thailand
- Binh Thuan Hamico - Vietnam
- Ministry of Finance - Indonesia
- Goldman Sachs - Singapore
- Grasim Industreis Ltd - India
- Agrawal Coal Company - India
- Dalmia Cement Bharat India
- Eastern Energy - Thailand
- Attock Cement Pakistan Limited
- IEA Clean Coal Centre - UK
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Planning Commission, India
- Therma Luzon, Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Makarim & Taira - Indonesia
- Tata Chemicals Ltd - India
- Sindya Power Generating Company Private Ltd
- CNBM International Corporation - China
- Indika Energy - Indonesia
- Renaissance Capital - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Tamil Nadu electricity Board
- Ind-Barath Power Infra Limited - India
- Antam Resourcindo - Indonesia
- Parry Sugars Refinery, India
- Borneo Indobara - Indonesia
- Australian Coal Association
- Orica Mining Services - Indonesia
- Coalindo Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Mercator Lines Limited - India
- Cigading International Bulk Terminal - Indonesia
- Malabar Cements Ltd - India
- Economic Council, Georgia
- Madhucon Powers Ltd - India
- Interocean Group of Companies - India
- Krishnapatnam Port Company Ltd. - India
- Wilmar Investment Holdings
- Coal and Oil Company - UAE
- Vedanta Resources Plc - India
- CIMB Investment Bank - Malaysia
- Standard Chartered Bank - UAE
- Alfred C Toepfer International GmbH - Germany
- Kepco SPC Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Ministry of Transport, Egypt
- San Jose City I Power Corp, Philippines
- SMG Consultants - Indonesia
- Riau Bara Harum - Indonesia
- Bhushan Steel Limited - India
- Savvy Resources Ltd - HongKong
- Thiess Contractors Indonesia
- South Luzon Thermal Energy Corporation
- The Treasury - Australian Government
- TeaM Sual Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Bulk Trading Sa - Switzerland
- Lanco Infratech Ltd - India
- Larsen & Toubro Limited - India
- Ambuja Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Power Finance Corporation Ltd., India
- Rashtriya Ispat Nigam Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Bhatia International Limited - India
- Bharathi Cement Corporation - India
- Formosa Plastics Group - Taiwan
- Rio Tinto Coal - Australia
- Kumho Petrochemical, South Korea
- Minerals Council of Australia
- Indian Energy Exchange, India
- Chettinad Cement Corporation Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Xindia Steels Limited - India
- Jindal Steel & Power Ltd - India
- Globalindo Alam Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Baramulti Group, Indonesia
- PNOC Exploration Corporation - Philippines
- London Commodity Brokers - England
- Price Waterhouse Coopers - Russia
- Merrill Lynch Commodities Europe
- Karaikal Port Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Wood Mackenzie - Singapore
- Toyota Tsusho Corporation, Japan
- Latin American Coal - Colombia
- PowerSource Philippines DevCo
- Posco Energy - South Korea
- Energy Link Ltd, New Zealand
- Marubeni Corporation - India
- Medco Energi Mining Internasional
- GAC Shipping (India) Pvt Ltd
- Gujarat Sidhee Cement - India
- Coastal Gujarat Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- Indian Oil Corporation Limited
- Gujarat Mineral Development Corp Ltd - India
- MS Steel International - UAE
- Indonesian Coal Mining Association
- Singapore Mercantile Exchange
- Altura Mining Limited, Indonesia
- Mintek Dendrill Indonesia
- Kaltim Prima Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Ministry of Mines - Canada
- Maharashtra Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- GMR Energy Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PTC India Limited - India
- Maheswari Brothers Coal Limited - India
- Carbofer General Trading SA - India
- Kohat Cement Company Ltd. - Pakistan
- Parliament of New Zealand
- Oldendorff Carriers - Singapore
- Simpson Spence & Young - Indonesia
- Thai Mozambique Logistica
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Energy Development Corp, Philippines
- Videocon Industries ltd - India
- Central Java Power - Indonesia
- Directorate Of Revenue Intelligence - India
- Manunggal Multi Energi - Indonesia
- The University of Queensland
- Sinarmas Energy and Mining - Indonesia
- Uttam Galva Steels Limited - India
- Petron Corporation, Philippines
- Star Paper Mills Limited - India
- Holcim Trading Pte Ltd - Singapore
- IHS Mccloskey Coal Group - USA
- Sical Logistics Limited - India
- Australian Commodity Traders Exchange
- VISA Power Limited - India
- New Zealand Coal & Carbon
- Heidelberg Cement - Germany
|
| |
| |
|
