THE GOVERNMENT IN DOUBT TO RENEGOTIATE OPERATING CONTRACT OF FREEPORT AND NEWMONT

             Mining Advocacy Network (Jatam) considers that the government is infirm in immediately renegotiating some Operating Contracts (KK) on mining, especially because there is some interest of the country of investment origin. Two US mining companies, Freeport and Newmont, have given the biggest gold bar contribution to the national economy. And, both companies have the longest time of operation in Indonesia. “The reason is not because mining is a big industry, but there is some interest of the country concerned. They have felt comfortable here, but feel very disturbed with renegotiation of Operating Contract”, Hendri, Siregar of Jatam, told Business News.

            The government has planned to renegotiate some operating contracts through Presidential Decree No. 3/2012. The Presidential Decree stipulates about Evaluation Team for Adjustment of Operating Contract and Coal Mining Operating Agreement signed early this year.

             The Presidential Decree also stipulates the Coordinating Minister, Hatta Rajasa, as chairman of the team. And, Minister of Energy and Mineral Resources, Jero Wacik is as daily chairman. Some ministers who joined the team will carry out their duties up to December 2013.

           The Presidential Decree sets forth clauses on operating contract and coal mining operating agreement which already exist so it is in accordance agreement which already exist so it is in accordance with Law No. 4/2009 on Mineral and Coal. Besides conducting evaluation of the Articles in the operating contract and operating agreement, the team also has other tasks as set forth in the Presidential Decree. Without the Presidential Decree, the company is still required to renegotiate. As this has been stated explicitly in Mineral and Coal Law No. 4/2009.

            The Evaluation Team formed by the government reports to the President and shall report its work result once in every six months. Evaluation is also conducted on operating contract of large mining companies. So far, profit share of coal mining operating contract is considered too low and unprofitable to the state. The government is intensely reviewing article by article all operating contracts which are considered distorting the country. “If a Law has been issued, Presidential Decree is no longer necessary. The important thing is that the implementation is in accordance with the provisions of the Mineral and Coal Law. The government is more doubtful when there is a member of US Senate who demanded that Freeport and Newmont are not to be messed up.

            Annual General Shareholders Meeting of PT Timah, Tbk (TINS) agreed on restructuring of members of Board of Directors and Board of Commissioners. After the meeting, the shareholders resolved to appoint former President Director of PT Tambang Batubara Bukit Asam (Person) Tbk, Sukrino, to replace Wachid Usman as President Director.

            PT Timah has so far been a strategic state owned enterprise considering that demand for tin in overseas market increases continuously. In addition to that, tin produced in Bangka Belitung (Babel) is still very potential because exporting countries, including Japan, still rely much on tin produced in Babel.

          The new members of the Board of Directors consist of Dadang Mulyadi, Purwijayanto, Ahmad Rosidi, Abrun Abubakar, and Ahmad Subagia. They replace Setyo Sardjono (Operations Director), Surawadi (General Affairs and Human Resource Director), Khisna Syarf (Finance Director), and Gatut Hari Prasetyo (Commerce and Business Development Director).

            The General Shareholders Meeting resolved to change structure of members of the company’s Board of Commissioners by appointing Insmerda Lebang (President Commissioner), Suryadi Saman (Independent Commissioner), and Erfi Triassunu (Commissioner). They are replacing Fachry Ali (Independent Commissioner) and Boni Siahaan (Commissioner). The President Commissioner remains unchanged.

            “Tin mining sector is still foreign to us. Give us time to explain about future performance of PT Timah”, Sukrino, President Director of PT Timah, told Business News.

            Sukrino, who is also former number-one person in coal mining company admitted that he is still “foreign” in tin sector because formerly, he handled coal commodity. But, we are optimistic that with performance and with cooperation with members of Board of Directors, the target can be achieved according to the one resolved in the General Shareholders Meeting. PT Timah will make progress”.   

BUSINESS NEWS - April 25, 2012