Wednesday, December 17, 2008

New Mining Mineral Coal Law

  • We can read in the newspaper in Jakarta that after having processed through tough discussion for 3 Years and 7 months the House of Representatives (DPR) has approved the Laws Mineral Mining and Coal Tuesday ( 16 Dec,08).
  • According to the news In Kompas today December 2008 in the front page said that such Law had ended the Era of Contract of Work which had been going for 41 Years.
  • This Law replaced the Law No. 11 Year 1967.
  • Through this new Law the performance of Mining is conducted through permits granted by the Government.
  • The change in the mining sectors through permits are crucial in the changes of the ruling of this mining regulations.
  • Most of the fractions in the House of Representatives (DPR) according to the newspaper say their appreciation because the form of permit makes the position of the State above the mining companies.
  • This position is not found under the Contract of Work scheme.
  • Even the decision in approving this new Law is not unanimous such Draft Law was approved.
  • The existing COW are still being honored to maintain the investment environment.
  • The question which may arise is : are there going to be adjustment made to the terms under the existing COW and the Coal Cooperation Agreement to be in accordance with this new Law ?
  • It is really interesting to hear this news, since "Permit" from the legal aspects will have different understanding and legal consequences with " Contracts" .
  • Our experience relating to Mining minerals activities are more based on a "Contract arrangement" between the Government as the "proxy" from the People of Indonesia through "Mining Authority" as the owner of the mining wealth, who enters into a "Contract of Work" with Mining contractors.
  • In a contract situation, both parties who signed the contract are having the same position, even though the Government at the same time has a "Public" function .
  • The terminology of a "permit" may be interpreted as a one side act from a government institution granting a "permit", where such permit is valid for a certain period of time.
  • The Legal Question which may arise is : "Can this permit be revoked by the Government Institution " as the granter of such permit, during the duration of the permit ? We hope this is not the case.
  • For us who are used to experienced contracts and has to switch their minds to "permit' in the mining sector, has to really read the Contents of this New Law.
  • This is significant to ensure that such "Permit" IUP gives assurance to the Mining Investors who spend monies and takes full risks, that they are given certainty of time to make profits from their mining ventures in Indonesia.
  • We noticed, that Mining Minerals Ventures in Indonesia adopted the concept that Minerals Products can only be owned by the Investors or Buyers of such Mineral Products, after such Product passed the point of Export.
  • Before passing the point of Export, such Minerals Products are still owned by the People of Indonesia who has granted the Mining Authority to the Government to mine and develop such Minerals Wealth for the welfare and prosperous of the People pursuant to Article 33 (3) of the Indonesian Basic Constitution.
  • Accordingly, there will always exist a combined and mixed situation where on One Side, The Government has the Public Mission, however at the other side of the Coin, The Mining Investors who are dealing with Government in handling such Mining Minerals and Coal Ventures, has to focus on making profits out of the monies that they spend and incurred in conducting such Mining Ventures;
  • Certainty for Climate Investment Environment for the Mining Investors are significant at one side, however, on the other side, the Government has a Public Mission, to also make sure that there are sufficient monies, from such Mineral Wealth Resources, to make the People of Indonesia as a whole, who has put their trust to the Government, increase their life welfare and prosperous.
Wednesday December 17, 2008
Agung Supomo SuleimanPartner Law Firm Suleiman Agung & Co
Freedom Business Lawyer
Partner Law Firm Suleiman Agung & Co



1. The Mining consist of radioactive mineral, metal and coal mineral, non metal and stone mineral.

2. There is only one mining business permit (IUP) which is issued by the Government for a certain area ( there is no more contract between company and the Government)

3. The permit is issued through tender process with the same treatment and transparency principal.

4. The Permit system is simplified to become two parts. First Part : Exploration Permit ( which includes GS, exploration and FS.Secondly L Operational which includes construction, mining, development, transportation and sale)

5. Environmental protection aspect (reclamation and post mining)

6. Observing Community Development mainly to increase the public society surrounding the mining

7. KP, KK, PK3B, SIPD, SIPR which are already issued shall still be valid until the expiration of the contract

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