Tuesday, April 21, 2009

Glance Snapshot on the new Mineral Law 4 Year 2009

  • After glancing the New Minerals and Coal Law No. 4 Year 2009, herein below is a brief glance snapshot of this New Law
  • As we can see in the reality mining operations practices the phase or stages of the Mining Activities are always having the same pattern which starts from the General Survey, Exploration, Feasibility Studies, Construction, Mining, Exploitation, purification, Transportation, Selling and Post Mining such as Reclamation.
  • These stages are also being accommodated in this new law.
  • The difference between this new law and the old law is that, there is no longer a Contract of Work ("COW") arrangement between new Mining Investors conducting operations after the enaction of this new law.
  • The Legal grounds to conduct the Mining Operations in Indonesia shall be based on Mining Permits being issued by the Authorized Governments of the Republic of Indonesia.
  • There are several Mining Permits which are being issued by the Authorized Government.
  • The Authorized Government consists of the Central Government and the Local Government Authorities (Provincial Government) and the Regency Government ( Pemerintah Kabupaten/kota)
  • Related to the issuance of the Mining Permits based on the Article 6 e, f, g, h, i, j the Central Government has the authority to determined the WP ( Mining Area), the issuance of the IUP (Mining Business Permits), IUPK Explorasi (Exploration Special Mining Permits) and the IUPK Operasi Produksi ( the Exploration Production Special Mining Permits) related to mining operations within the province area and/or sea Area from 12 miles from the costal line.
  • The Provincial Governments based on Article 7 b, c, d, has the authority to issue the IUP (Mining Business Permits) related to the production mining operations which is located within the Kabupaten/Kota and /or Sea Area 4 miles up to 12 miles.
  • The Regency Government has the right to issue IUP and IPR for the mining activities within the Regency Area (Wilayah Kabupaten) /Kota and or Sea Area up to 4 miles. ( Article 8 b, c).
  • The WP (Mining Area) as part of the national spatial area shall form the basis of determining the Mining Activities ( Article 9 (1) of New Law. Such WP is determined by the Central Government after coordination with the Local Government and Consultation with the People's House of Representatives.( Article 9 (2) New Law)
  • The determination of this Mining Area must be transparent, participative and accountable. This WP determination has to accommodate the relevant people's opinion by taking into consideration of the ecology, economy, social culture and environmental vision and the local aspiration ( pursuant to Article 10 a, b,c)
  • The Central Government and the Local Government is obliged to conduct mining investigation and research in the framework of determining this WP ( Mining Area).
  • In essence this WP consists of WUP (Mining Business Area), WPR (Peoples Mining Area) and WPN (The State Reserved Mining Area). ( Art.13 New Law).
  • One of the most interesting part is that this Mining Permits, is related to the Location of the Mining related to the Mining Minerals which will be explored, the total area of the Mining Area which of course is related to the amounts of capital investments, which is required for the exploration, exploitation and production, and the lenght of the Mining Permits which will be granted by the Authorized Government.
  • The condition of the Mining Permits has to be included in the Mining Permits, but not in the form of Contract of Works (COW) as we usually knew and practiced in the previous mining law.
  • Thus from the legal aspects, it is really interesting to be observed, since this Mining Permits, are more of a "one sided Mining Rights" which is granted by the Authorized Government, and may be revoked by the Government, if the Government decided that the Mining Contractor does not comply with the terms which is incorporated in the Mining Permits.
  • The other interesting issue, is that a Certain Mining Area could be determined as a Special Mining Area, if after consultation with the Peoples House Of Representative in such Mining Area, there is a mining deposit which for the National Interest can boost the economy growth, the energy strenght and the national industry strategy and increase the national competitiveness in facing the global challenges among others copper, gold, nickel, iron, coal.( Article 27 and its explanation).
  • well, folks, the above, is a glance snapshot of the New Minerals and Coal Law No 4 Year 2009.
Jakarta, April 21, 2009

Agung Supomo Suleiman

Senior Partner

Law Firm Suleiman Agung & CO

Blog Law Firm : http://sacolaw.blogspot.com

Email : agungsuleiman@gmail.com

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