Miners welcome Indonesia's new jobs bill that could spur
coal growth
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[February 18, 2020] By
Fransiska Nangoy and Wilda Asmarini
JAKARTA (Reuters) - Miners have welcomed
proposed changes to Indonesian mining rules under a new law aimed at
boosting investment, though critics are concerned that the changes could
underpin an expansion in polluting coal and threaten environment
protection.
President Joko Widodo's sprawling "Job Creation" bill seeks to change
about 80 laws affecting many business sectors, including mining, in
order to fix rules deemed cumbersome for investors.
Indonesia is a top exporter of thermal coal, tin and nickel products,
but overall mining investment dropped from 79 trillion rupiah ($5.8
billion) in 2017 to 59 trillion rupiah ($4.3 billion) last year, data
from its investment board showed.
Miners are most supportive of a provision in the bill that would set a
mining area's size based on a work plan submitted for government
approval. The measure would replace current rules that would limit the
size of coal mines to 15,000 hectares (37,000 acres) and other mineral
mines to 25,000 hectares when miners convert their contracts to a new
license.
![](http://archives.lincolndailynews.com/2020/Feb/18/images/ads/current/humanesociety_sda022411.png)
The bill would also allow miners to receive an initial 30-year mining
permit that could be extended periodically for as long as the mine's
lifespan but only if the miner invests in downstream ore smelting or
coal gasification projects.
"The draft is good for the investment climate in the mining sector
because it is giving more legal certainty," said Ido Hutabarat, chairman
of the Indonesian Mining Association.
"If the permit extension can be done for as long as the life span of the
mine, the massive investment into downstreaming can be realized because
lenders will also have more security for their loans," he said.
Indonesia has been trying to squeeze more out of its mineral resources
and the new bill would also exempt royalties for miners adding value by
processing or smelting ore or coal.
Hendra Sinadia of the Indonesia Coal Miners Association said the bill
was a "positive step", but more details were needed, including on the
pricing of gas produced from coal.
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![](../images/021820pics/busine29.jpg)
A truck passes through a tin mining area of Indonesia's PT Timah in
Pemali, Bangka island, Indonesia, July 25, 2019. REUTERS/Fransiska
Nangoy/File Photo
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The government wants miners to process coal into gaseous dimethyl ether
to replace liquefied petroleum gas imports.
Indonesia's largest coal miner PT Bumi Resources is conducting a study
on a gasification project that could be worth more than $1 billion.
Dileep Srivastava, a director at Bumi, said the proposed legal revisions
"would enable (Bumi) to progress its proposal forward" to the investment
consideration.
The bill, however, may face "tough debate" in parliament, especially
regarding the size of mining areas, said Ahmad Redi, a natural resources
law expert at Tarumanagara University.
Some of the parliament representatives may say the changes to the mine
sizes in the new bill violate the Indonesian constitution, which states
that natural resources should be under the control of the state, he
said.
Melky Nahar, the chief campaigner for the Mining Advocacy Network, said
the bill is "a step backwards that is trapping Indonesia in a coal
economy."
Removing the restrictions on the size of the mining concessions could
cause serious social and environmental consequences to nearby
communities, such as forced relocations, loss of livelihoods and
ecological destruction.
Environmentalists also worry the new rules would remove incentives for
miners to restore mining sites.
"When they can extend the license continuously, we see that as an
opportunity for them to avoid reclamation responsibilities," said Iqbal
Damanik, a researcher at environmentalist group Auriga.
(Additional reporting by Bernadette Christina Munthe; Editing by Ed
Davies and Christian Schmollinger)
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