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Monday, 28 September 09
INDONESIA UNLIKELY TO PASS NEW MINING RULES IN 2009


Reuters reported that, Indonesia is unlikely to complete final regulations attached to a new mining and coal law this year, an official said on Monday, creating more uncertainty for a sector that is already struggling to attract new investment.

The government has been drafting regulations on the new mining and coal law passed in December 2008 for presidential approval, and had said they should be issued by October when a new administration under President Susilo Bambang Yudhoyono is due to start a second term.

Bambang Gatot Ariyono, director of mining and coal production at the energy and mines ministry, said ministries including the forestry and finance Ministry with vested interests in the regulations had yet to respond to the drafts proposed by his office.

"Looking at the progress, we doubt the regulations can be completed this year," said Ariyono, who did not say when he thought the regulations were likely to be completed.

For a factbox on the draft regulations of Indonesia's new mining law

Issuing the regulations is seen as crucial to providing more certainty for mining investors in Southeast Asia's biggest economy.

But analysts have said it may take more time to issue the regulations. In the case of an oil and gas law passed in 2001, it took three years to issue the implementing regulations.

With the delay, the sector is unlikely to see fresh investment in the near future as the government has frozen new mining permits until the regulations are finalised and there may be further delays under a new government.

President Yudhoyono may create new ministerial posts to spur development of the natural resources sector, sources told Reuters.

One idea being considered is to establish a new co-ordinating minister for resources and also to separate the energy and mining portfolios, with the co-ordinating minister overseeing these, as well as agriculture, forestry, and environment, a source said.

The Indonesian Mining Association has said mining investment would fall below $1 billion this year due to uncertainty over the new mining law, although the government says investment from mining -- including geothermal -- could surpass $2 billion.

A combination of low metal prices and uncertainty over the new mining and coal law has prompted some companies to shelve their investment plans since last year.

BHP Billiton scrapped a study to develop an integrated nickel project in eastern Indonesia and also decided it would not go ahead with a coal mine in Central Kalminantan. Chinese firm Tsingshan Mineral Company Ltd had scrapped a $500 million nickel project in North Maluku in Indonesia
Source: Reuters



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