Mining-Law Revision to Focus on Domestic Downstream Activity

Indonesian Version

 
Marcell Sihombing, Fathan Qorib/ANT
 

In line with the 2016 National Legislation Program (Prolegnas), the government is currently drafting a Draft Bill on the Amendment to Law No. 4 of 2009 on Minerals and Coal Mining (Draft Bill). According to Luhut Binsar Panjaitan, the Coordinating Minister for Maritime Affairs and the Acting Minister of Energy and Mineral Resources [ESDM], the Draft Bill will primarily focus upon domestic downstream activities as a vital pillar of support for the Indonesian national interest.

 
Commenting on the Draft Bill, Minister Panjaitan recently stated that the principle underlying the revision was to maintain national sovereignty above any possible interventions by other parties while upholding the fairness principle, so that all parties would be able to enjoy equality before the law. In specific regard to the fairness principle, Minister Panjaitan asserted that the ESDM Ministry intends to provide fair opportunities to all relevant parties, instead of solely facilitating the interests of prominent mining corporations such as Freeport and Newmont.
 
“We intend to communicate with all related parties,” Minister Panjaitan added.
 
In order to achieve these objectives, Minister Panjaitan has invited several experts to assist with the formulation of the Draft Bill, which is being targeted for completion by the end of this year. At this stage of the deliberations, Minister Panjaitan has already asked experts Professor Hikmahanto Juwana and Professor Heriyanto to participate in the formulation of measures intended to deal with various issues relating to the Mining Law.
 
Minister Panjaitan further added that the government would also be revising a number of implementing regulations relating to the Mining Law, so that the regulatory framework will not contradict the various provisions which are set out in the upcoming law in any way. One such regulation will be Government Regulation No. 77 of 2014 on Mineral and Coal Mining Business Activities (2014 Regulation).
 
“During the next ten days, we intend to harmonize all of the various regulatory frameworks governing the mining sector, including the Mining Law, the 2014 Regulation and various Presidential decisions,” Minister Panjaitan concluded.
 
Previously, however, various members of the Association of Indonesian Refinery and Processing Industry Companies (Asosiasi Perusahaan Industri Pengolahan dan Pemurnian Indonesia – AP3I) had expressed their opposition to the government’s plan to incorporate a provision delaying the proposed mineral-ore export prohibition by between three and five years as of January 2017 (or in other words, until between 2020 and 2022). AP3I comprises of 21 smelter companies and the Association has aired its concern regarding the proposed relaxation of the export-prohibition plan.
 
According to AP3I Chairman, Prihadi Santoso, the government’s plan to delay the mineral-ore export prohibition only revealed its inconsistency as regards the implementation of the Mining Law. Mr. Santoso stressed that the main objective underlying the export prohibition was to increase the added value of Indonesia’s mineral products, while also affirming that the export prohibition had already in force since 2014, in accordance with the Mining Law. However, Mr. Santoso believes that this goal will now be threatened, as the government is planning to revoke the prohibition from January 2017.
 
“This move will ultimately prove detrimental to the country’s investment climate,” Mr. Santoso added.
 
Mr. Santoso also went on to assert that the prohibition on the export of mineral ores had directly led to the construction of 27 new smelters with a total investment value of some USD 12 million. These new smelters have also generated some 15,000 employment opportunities. Mr. Santoso hopes that this huge improvement to the domestic-smelter industry should be fully supported by a simplification of various business activities, as well as by an acceleration of the construction of the relevant supporting infrastructure.
 
Referring back to the plan to relax the export prohibition, Mr. Santoso claimed that such a measure would ultimately only harm domestic smelter companies, especially when it comes to the obtainability of domestic ore supplies. Mr. Santoso believes that the government should instead be guaranteeing a supply of raw materials for existing smelters under the domestic market obligation, which is also known as the DMO scheme.
 
In conclusion, Mr. Santoso asserted that the current Mining Law already satisfied the various provisions set out in Article 33 of the 1945 Constitution, which fully supports public welfare. Therefore, in his view, there is clearly no need to revise the current Mining Law.

(cd/sp)