Indonesia plans to offer 16 mining areas for exploration to investors through auction, the first auction since the country passed a new mining law in 2009.
The mining areas, include a coal mining area previously owned by Nusantara Thermal Coal, whose coal contract of works was terminated in 2016 and 5 nickel mining areas which were previously operated by publicly-listed nickel miner, PT Vale Indonesia, Agung Pribadi, spokesman at the Energy and Mineral Resources Ministry said by phone on Friday, Jan. 26. PT Vale Indonesia is the Indonesian unit of Brazilian nickel producer, Vale SA. These areas have contract-based mining permit under the defunct 1967 Mining Law or known as coal contract of works (CCOW) and contract of works.
As part of the implementation of the 2009 Mining Law, Indonesian coal and mining companies operating with contracts must amend their contract, which include, handing over areas that haven’t been explored to the central government. Under the law, the areas will be listed as a special mining areas and will be put offer for exploration in auction.
Another 10 mining areas, both coal and minerals, have a Mining Business License or IUP, a new mining permit under the 2009 Mining Law.
“We hope to roll out the auction this year. We’re still waiting for the energy minister’s decree to be issued,” Pribadi said. The energy minister’s decree will regulate administrative, financial and technical requirements for the potential investors, he added.
Mining areas with contracts will be prioritized to be offered to the state-owned enterprises and the regional state enterprises and the auction will be carried out by the central government. Mining areas with IUP license will be open to all foreign and domestic investors and the auction will be done by the regional governments where the mines are located.
This will be the first auction after the 2009 Mining Law was passed, which stipulates that new mining licenses will be granted through the auction of mining areas. Indonesia has suspended issuing new mining license until it can hold mining areas auction. Most of licenses granted in the past years were from new license requests that were submitted before the 2009 Mining Law was in effect.
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