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Nickel Industry Is Watching Results Of New Mining Law In Indonesia
= COW For Investments By Foreign Enterprises Is Revoked And Shifted To Mining Permission
The National Assembly of Indonesia has taken more than 3 years to discuss about new law and approved at its plenary session held on the 16th of December New Mining Law (Minerals and Coal Resources Law). In view of the importance of Indonesia as a country to supply nickel resource, the parties concerned in nickel business have been highly interested in knowing about the contents of this new law and how to determine its stipulations.

According to the statistics released by the Ministry of Finance, Japan imported 2,075,000 tons in material of nickel ore, 95,124 tons in material of nickel matte and 1,951 tons in material of ferro-nickel from Indonesia in the calendar year (January - December) of 2007. Therefore, Indonesia is one of important sources for Japan to import nickel resources.

The businesses to import nickel resources from Indonesia into Japan have been transacted through PT Antam, as a national mining corporation of Indonesia, and it is interested in knowing about the position and competence of Antam under this new law and an issue of the existing contracts.

The reactions to this new mining law taken by the industries concerned in nickel are (1) It will become difficult to invest large amount in mining projects by overseas enterprises and this problem is due to the revocation of COW (system to conclude mining contracts for investments from overseas enterprises) and subject to mining permission., (2) A period for exploration is 8 years as the maximum and a period for production is 20 years as the maximum with twice renewals to be allowed for 10 years as the maximum in each case. Also, the existing COW is still effective in the period but will be applied to new mining law within one year., (3) Many of the parties concerned have understood that the obligation to add values to commodities produced in Indonesia (the existing COW has set up a grace period of 5 years) and the existing COW have to be respected, but it is still necessary to study this new mining law and its detailed regulations., and so on. Therefore, there is a strong opinion in the market that the conditions to regulate for mining in Indonesia are anticipated to become more.

Indonesia has taken more than 3 years to discuss about revision of mining law, causing to continue an unstable political situation, but New Mining Law has been approved and, consequently, it is expected that active projects to invest in developments of mineral resources will come up hereafter. The Central Government of Indonesia is scheduled to grant IUPK (Special Mining Permission) by means of giving priority to national corporations and domestic enterprises.

For a reference, the existing large nickel projects in Indonesia are (1) Weda Bay project by Eramet of France = to produce 60,000 tons / year of nickel from 2013 in Halmahera Island, (2) Sulawesi project by Rio Tinto = to produce 46,000 tons / year of nickel from 2015 in Sulawesi Island, (3) Sulawesi project by PT Inco of Indonesia = to increase nickel production to 90,000 tons / year by expansion of capacity to generate electric power, and so on.
last modified : Wed 07 Jan, 2009 [10:38]
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