After almost four years of back and forth the Bill on Mineral and Coal Mining finally passed the House of Representatives on Tuesday (16/12/2008). However, the passage of the bill was not without incident. Three factions of the House walked out over the failure of the House to recognize their concerns on several of the substantive provisions of the bill.
The bill officially brings to a close the more than 40 years of the “Work Contract” system. The new law will require a system of licensing to be implemented where the government is responsible for providing that licensing.
The most problematic of the provisions appears to be Article 169 which in essence states that: all current contracts will be valid until they expire. However, the Article also stipulates that the provisions of the work contracts must be in compliance with the provisions of the new law within one year of the new law coming into operation.
This conceivably opens the door for current work contracts to be renegotiated. The opening of the door is considered to be discriminative. However, it is worth noting that the new law represents a fundamental shift in the way mining of minerals and coal in Indonesia is to be regulated. Nevertheless, this may be nothing more than a storm in a teacup as a harmonization of terms is not likely to be considered as open season in terms of renegotiating the terms of existing contracts.
Other problematic Articles include Article 5, Article 91, and Article 134. Article 5 I considered to be problematic as it will set out the percentage of production that is to be allocated to domestic consumption. Article 91 is considered to be problematic as it deals with the use of existing infrastructure and equipment. Finally, Article 134 is considered problematic as it is likely to give rise to disputes over the use of land, particularly where that land might already be subject to conservation protection but then the government then grants a mining license for that land anyway.
The bill repeals and replaces Law No. 11 of 1967. The new law will come into force on the date of its enactment.
After almost four years of back and forth the Bill on Mineral and Coal Mining finally passed the House of Representatives on Tuesday (16/12/2008). However, the passage of the bill was not without incident. Three factions of the House walked out over the failure of the House to recognize their concerns on several of the substantive provisions of the bill.
The bill officially brings to a close the more than 40 years of the “Work Contract” system. The new law will require a system of licensing to be implemented where the government is responsible for providing that licensing.
The most problematic of the provisions appears to be Article 169 which in essence states that: all current contracts will be valid until they expire. However, the Article also stipulates that the provisions of the work contracts must be in compliance with the provisions of the new law within one year of the new law coming into operation.
This conceivably opens the door for current work contracts to be renegotiated. The opening of the door is considered to be discriminative. However, it is worth noting that the new law represents a fundamental shift in the way mining of minerals and coal in Indonesia is to be regulated. Nevertheless, this may be nothing more than a storm in a teacup as a harmonization of terms is not likely to be considered as open season in terms of renegotiating the terms of existing contracts.
Other problematic Articles include Article 5, Article 91, and Article 134. Article 5 I considered to be problematic as it will set out the percentage of production that is to be allocated to domestic consumption. Article 91 is considered to be problematic as it deals with the use of existing infrastructure and equipment. Finally, Article 134 is considered problematic as it is likely to give rise to disputes over the use of land, particularly where that land might already be subject to conservation protection but then the government then grants a mining license for that land anyway.
The bill repeals and replaces Law No. 11 of 1967. The new law will come into force on the date of its enactment.
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