Environment Secretary Ramon Paje said the DENR and the National Tourism Council last week approved proposals to delineate hundreds of areas as special zones to limit commercial activities there.

There are currently 239 protected areas in the country. Of that number, the government, which is currently drafting a new mining policy, will declare 178 as eco-tourism zones, which will bar extractive industries from entering the areas.

“The priority land use in these areas is tourism,” Paje said. “We have agreed that these areas are no-mining zones,” Paje added.

He noted that the Aquino administration was supportive of the idea since it wants to bolster the country’s tourism industry. A few months ago, the Department of Tourism launched a campaign with a tag line “It’s More Fun in the Philippines” to entice more foreign tourists to come to the country.

Aside from the current 239 protected areas, Paje said, the Protected Areas and Wildlife Bureau has asked nine more areas to be included in the list.

The nine areas placed under the conservation area status are: Balbalan-Balbalasang National Park in the Cordillera Region, Zambales Mountains in Regions 1 and 3, Mounts Irid Angelo and Binuang in Region 4A, Polilio Group of Islands, also in Region 4A, Mt. Iglit Baco National Park in Region 4B, Mt. Nug as Lantoy in Region 7, Mt. Nacolod in Region 8, Mt. Hilong-hilong in Region 13, and Bongao Peak on Tawi-tawi Island.

The government’s move to delineate more protected areas came as the DENR, Silliman University, and the German aid agency GIZ reviewed the National Integrated Protected Areas System Act of 1992 or NIPAS. They recommended in their NIPAS Review that the government streamline the steps in establishing protected areas and improve the fencing mechanism and buffer zones.

The review also said the current laws on protected areas and the Mining Act of 1995 were  “in conflict” when it comes to areas that are open to mining and areas with protected status.

It explained that a mining area is automatically granted that status under the Mining Act. However, loopholes in the NIPAS law mandates that Congress has to declare a particular area as a protected site, which is an expensive and long process.

The review also noted that the present law was inadequate in giving protection to conservation areas and called for the inclusion of marine ecosystems in the definition of a protected area.

PAWB  director Mundita Lim expressed worry that without an official declaration, mineral-rich ecosystems could be claimed by mining companies.

Many of the country’s parks have plenty of mineral deposits, she said. However, these areas are also rich in biodiversity and are home to indigenous people whose way of life could be disrupted by the entry of extractive industries.

According to the PAWB, the Balbalan-Balbalasang National Park is home to a wide variety of frogs and amphibians. Mt. Iglit Baco in Mindoro, aside from being the home of Mangyans, is also the home of the elusive tamaraw.

The Zambales mountain range, on the other hand, is the habitat of the cloud rat, a species native to the Philippines which is considered prey by large birds and fowl. The cloud rat may be revolting to some, but without it, the ecosystem of the Zambales mountains would be in disarray.

“We need to grow,” group CEO Datuk Shamsul Azhar Abbas said in a recent interview. “Energy reserve is not finite, it will deplete. You can’t be sucking us dry.”

Petronas is the biggest single contributor to government revenue, having paid RM30bil in dividends for each of the past three financial years. Shamsul, who took over as CEO in 2010, wants to retain more of the company’s profits to invest in exploration after seeing Malaysia’s oil and gas production fall for three straight years.

It plans to spend a record RM300bil over five years to replenish the country’s maturing reserves and counter mounting exploration costs. It has stepped up offshore drilling with local and overseas partners, including Petrofac Ltd, to boost the nation’s underground holdings of oil and gas.

Malaysia, South-East Asia’s biggest oil and gas producer after Indonesia, saw production fall to 1.61 million barrels of oil equivalent a day in the year ended March 31, 2011, from 1.63 million a day a year earlier, according to the company’s annual report.

Petronas might be able to reverse slumping production by 2014 as output was expected to be boosted by deepwater developments offshore in Sabah, Shamsul said.

The company would gradually switch to a dividend payout ratio of 30% of profit to reflect broader oil industry practices, he said.

Crude oil reserves rose 1% to 5.86 billion barrels as of Jan 1, 2011, with an expected lifespan of 24 years, the Government said in October. Gas reserves grew 0.3% to 88.9 trillion cu ft, enough to last 39 years, one year more than previously projected.

In another development, South Africa Energy-Department director-general Nelisiwe Magubane said the shift by Petronas’ Engen unit in South Africa from using oil imported from Iran, which last year was the source of 26% of crude imports, is expected to cost 300 million rand (RM125mil).

Engen, which operates South Africa’s second-biggest crude refinery and gets about 80% of its supply from Iran, has “not yet asked” the government for financial assistance to help with the conversion, Magubane told reporters in Pretoria yesterday. Engen “has not indicated” it will have to close the refinery, she said. – Bloomberg

“Human Development Index (HDI Human Development-Index) of ASEAN countries are mostly ranked in the lower position, which indicated the latent problem of poverty in the ASEAN countries. The scores also show the poor quality of social services such as education, health and other public services in the region,” said Yesi Maryam, the Institute for Essential Services Reform.

In addition, the exploitation of extractive resources has also led to many conflicts, social unrest and environmental damage.

“Around 3000 people were relocated due to construction of an oil pipeline in Maday, and other 7000 Pinpet relocated due to mining projects in Northern Burma,” said Wong Aung, coordinator of Shwe Gas Movement, to show the critical issues in governing extractive industries in Southeast Asia.

The importance of management of extractive industries transparency was one of the themes discussed at the workshop conference. Taking place in Phnom Penh, Cambodia, March 29 to 31, the workshop was the part of series of ASEAN Civil Society Conference (ACSC) which was attended by various civil society groups from Indonesia, Thailand, Vietnam, Malaysia, Cambodia, Burma, and the Philippines

Exposure by civil society groups from ASEAN countries showed that a breakthrough was needed for ASEAN in managing their natural resources. Wong Aung said that the process of extraction of natural resources has caused environmental damage which affected the community and their livelihood. Lack of transparency and accountability in the management has also caused severe land degradation which should be the source of livelihood for the community.

Meanwhile, Pham Quang Tu, from CODE, a social and environmental organization in Vietnam recognized that the issue of transparency remains a challenge for people in Vietnam. Tu explained that a very strong control of PetroVietnam make the industry become untouchable for most people.

“In Vietnam, our biggest challenge is the issue of corruption. Hardly to  really knows how the licensing process mining is given. Majority argued that the company must pay to obtain that license. Such corruption causes Vietnam to lose a lot of natural resources. In addition, they also have difficulties in terms of coordination,” said Tu.

Tu explained that the civil society groups in Vietnam were trying to develop a model to resolve the issue by developing a multi-stakeholder forum consisting of representatives of civil society, governments and corporations.

Addressing the above issues, the forum then come out with variety of recommendations. One of them is by pushing ASEAN countries to implement the Extractive Industries Transparency Initiative (EITI), a standard to promote transparency in the extractive sector. Simply put, EITI encourages companies to publicly report their payments to the government. At the same time, it encourages governments to publish their income from extractive companies. Both reports will be reconciled by an independent auditing agency.

“EITI provides an opportunity for civil society to be able to sit the equivalent of the government and companies in the extractive sector to discuss issues. Since this initiative requires the state to form a multi-stakeholder group (multi-stakeholder group) to oversee the whole process. ”

Indonesia became the only country in Southeast Asia which adopted EITI. On his tenure as chairman of ASEAN 2011, Indonesia took the opportunity to introduce such initiatives in the Energy Cooperation and the ASEAN Mineral Cooperation. The effort got a positive response from other ASEAN countries. In the ASEAN Ministerial Meeting on Minerals (AMMin) in December 2011, the ASEAN ministers agreed to make EITI as one of capacity building program in the ASEAN Minerals Cooperation Action Plan (AMCAP) 2011-2015. It was expected that the inclusion of the EITI in the ASEAN cooperation will accelerate the process of driving the transformation in the extractive sector in ASEAN countries

You can download all of the speaker’s presentation here:

1. Overview and Current Development of EITI in Southeast2

2. CODE-PanNature presentation in APF 2012- Cambodia [Compatibility Mode]

3. Burma Extrative Sectors, APF 2012 Cambodia [Compatibility Mode]

4. 2012 ACSC APF Joint Statement – Final_31-03-12 (3)

The reclusive Southeast Asian nation will host a two-day conference, starting on Wednesday, which organisers say is the first major oil industry gathering since the country’s transition to a civilian government last year.

The meeting comes just days before crucial parliamentary by-elections that will be contested by opposition leader Aung San Suu Kyi, and which if run free and fair, could trigger the lifting of US and European sanctions in the former Burma.

This would give the green light to Western oil investors who have largely just watched China, India and other Asian nations develop Myanmar’s energy sector for the past 15 years.

“We didn’t need to convince Myanmar’s government to hold this conference. They themselves realised that it’s important to open up and really tell the world what the opportunities are,” said G. Seelan, managing director of Singapore-based organisers, Centre for Management Technology.

Hundreds of delegates from 35 nations will attend the meeting, at which Myanmar’s Minister of Energy Than Htay and other top government officials will outline plans for the exploration and production of oil and natural gas.

Attendees will also address the huge infrastructure obstacles facing Myanmar’s economy, such as ports, storage terminals, transportation and electricity supplies.

Myanmar has more than 100 onshore and offshore blocks with more than half yet to be awarded. It is expected to launch a global tender for six blocks this year, following the awarding in January of 10 out of 18 offered onshore blocks, which were snapped up mostly by Asian firms.

Myanmar’s neighbours from China and India  to Thailand and Bangladesh have been sizing up its natural gas fields, hoping they can feed their own rapidly growing energy needs.Myanmar will begin to supply gas to China next year and will boost exports to Thailand through its Zawtika gas field.

Oil minister Than Htay told Reuters in January that Myanmar held 22.5 trillion cubic feet of natural gas reserves, almost double the 11.8 trillion estimated by oil major BP in its 2011 statistical review.

While Myanmar’s potential is undisputed, its human rights record may dictate the amount invested in the energy sector.

The US government still bars firms from making new investments in Myanmar and European firms say they need concrete signs that the government is committed to democracy before setting up major projects.

International oil majors, however, including Royal Dutch Shell, US oil major Chevron,Italy’s Eni and France’s Total are expected to attend.

But the conference is likely to be dominated by Asian firms ranging from China National Offshore Oil Corp and Malaysia’s state firm Petronas to Thailand’s PTT Pcl and Japan’s JX Nippon Oil & Energy Corp, the organisers say.

“Foreign oil companies should not come in to Myanmar yet. There is still a lack of transparency and the investment in the oil and gas sector is not benefiting the country or the people’s livelihood,” said Jockai Khain, director of rights group Arakan Oil Watch.

Japan’s top two ferro-nickel producers, Sumitomo Metal Mining and unlisted Pacific Metals Co, are expected to take a major hit from the new rule, with Japan relying on Indonesia for more than 50% of its nickel supply. Ferro-nickel is used in making stainless steel.

“We are talking with the Indonesian government if it’s possible to export what it cannot process at home,” Nobu Kemori, president of Sumitomo Metal Mining, told Reuters in an interview.

“We believe that possibility is not low given a lack of smelter capacity in Indonesia, costs and time involved in building new smelters, including facilities such as power plants. But at the same time we are looking to increase supply from New Caledonia, the Philippines and the Solomons,” Kemori said.

Indonesia’s ban on exports of some unprocessed metals, including copper, from January 2014 could lead to a scramble by  global consumers for minerals elsewhere, with the shrinking supply outlook ultimately supporting benchmark prices.

In 2010, Japan imported 40,000 tons of nickel from Indonesia out of a total of 77,000 tons of imports, according to customs-cleared statistics.

Imports of Indonesian copper made up 20 percent of Japan’s total imports of 1.3 million tons.

Kemori also said the firm’s 63%-owned Taganito nickel project in the Philippines will launch production in July or August 2013, with output in 2014 seen reaching at least 27,000 tons, or 90% of its capacity.

An attack by Maoist rebels late last year will push back the launch of the $1.3 billion project by a couple of months and raise the cost of by some $100 million, he said.

Workshop on

Escaping Resource Curse in Southeast Asia

Transforming the Extractive Industries in to People’s Prosperity

Organized by:

Institute for Essential Services Reform (IESR)-Indonesia, Cambodia Resource Revenue Transparency (CRRT)-Cambodia, Consultancy on Development (CODE)-Vietnam, Ecological Recovery and Regional Alliance (TERRA)-Thailand, Shwe Gas Movement -Burma

Background

Southeast Asia has abundant oil, gas and mineral resources (extractive industries) that have brought important and major revenue for several ASEAN member countries in last few decades. For several decades Indonesia, Malaysia, and Brunei enjoyed significant revenue flow from oil and gas production. Recently, as for Cambodia, Myanmar, Laos and Vietnam has been developing its hydrocarbon and mineral resources, they have been just starting to enjoy revenues from the extractive industries activities. Meanwhile other countries in this region also enjoyed revenue from mineral productions and other mining activities with various levels.

Whilst the South East Asia region is certainly abundant in natural resources, major challenges include the unequal distribution of such resources and the fact that countries are at very different stages of resource development. Many countries are heavily dependent on foreign direct investment from multi-national or privately-owned regional companies and national oil companies, yet to date, the revenues contributions of mineral resources to the total revenue is still minimal. Much of this is due to unstable commodity prices, a lack of transparent and accountable governance, and flawed fiscal regimes. Bad governance practices such as rampant corruption is a big challenge to transform the resource into people’s prosperity.

The presence of the industries has also created some negative impacts such as: human rights violation, displacement, ecological destruction, environmental pollution, and other social problems. Combination of these factors can cause a country to have phenomena called “resource curse,” a situation where a country has a plenty or natural resources but suffer the poverty and under-development.

To overcome the situation, there should be a concrete action to push the government to be more open, transparent and responsive to citizen’s demand.  Adopting and incorporating internationally recognized standards of good governance and transparency for extractive industries would be a first step toward building of a system that can generate prosperity from extractive industries.

Objective

1. To understand the critical issues and challenges in Extractive Industries (oil, gas and mineral) in Southeast Asia;
2. To exchange ideas on the development of ASEAN Framework on the Extractive Industries as a guideline principles for Southeast Asian countries in extracting their natural resources to ensure the outmost benefit for the people and country.

Date and Venue:

Date    : Friday, 30 March 2012

Time    :08:00 AM – 10:15 AM

Venue: Lucky Star Hotel, Phnom Penh, Kingdom of Cambodia

Program

The program will start with introduction on the background and objectives of the workshop. The session then followed with presentations for one hour and thirty minutes. The first speakers will address the regional context and situation of extractive industries management in Southeast Asia, as well as the regional cooperation within the ASEAN member states on extractive issues. The second speaker will focus on the national situation of extractive industries; the issue will be represented by Cambodian case. The last speaker then will address the possible

1. Presentations :

• Introduction – 5 minutes, moderator
• Overview of current situation and development in Southeast Asia, Chandra Kirana – EITI-Indonesia
• Challenges of transforming natural resource into people’s prosperity: the case of Cambodia , CRRT
• Governing Extractive Industries Resources: Experience from Vietnam, Pham Quang Tu (CODE)

1. Open Discussion: Participants.

1. Summary of input and key recommendation by rapporteur

Participant

Participation of this workshop is open to all participant of ACSC/APF. We expect 30-40 people will attend the workshop.

Contact

• Sarath Chhay, Cambodia for Resource Revenue Transparency (CRRT), Sarath.chhay@gmail.com
• Morentalisa, Institute for Essential Services Reform (IESR), morentalisa@iesr.or.id

We cordially invite you to join us in the ASEAN Civil Society Conference (ACSC) /ASEAN People Forum 2012 in Pnom Penh, Cambodia. ACSC is annual forum for civil society in across the region to discussion about various issues faced by Southeast Asian people.

The ACSC was initiated by the Government of Malaysia. Whilst chairing ASEAN in 2005, the Government of Malaysia commissioned the ASEAN Study Centre of the Universiti Teknologi Mara (UiTM) to organise a civil society event parallel to the 11th ASEAN Summit on December 2005. The ASEAN Secretariat eventually supported the ACSC, and a number of Malaysian-based non-governmental organisations (NGOs) also involved in the preparation and implementation of the event.

The importance of the ACSC was not only because it was a forum that helped to consolidate CSO’s positions on major regional issues and agenda, but this forum will provide an acknowledgement of the presence of civil society in the ongoing regionalization process in ASEAN.

Seeing the potential of the ACSC to help gather wide-range civil society groups and influence the policy direction of ASEAN, a number of representatives of regional and national NGOs held a series of consultations at the side of the First ACSC, trying to determine the best way forward to bring civil society’s engagement with ASEAN to the next level.

The ACSC will be held in:

Date     : 29-31 March 2012

Venue : Lucky Star Hotel, Phnom Penh, Kingdom of Cambodia

You can also find the overall program and contact person of each thematic workshop in this ACSC/APF. FINAL List of Thematic Workshops & Time Schedule

“We believe that although there will be ebbs and flows in the overall reform/regulatory environment in Indonesia, we view the progress made by the government so far as Glass Half-Full rather than Half-Empty,” Morgan Stanley, a US investment bank, said in a report on Friday on equity strategy in Southeast Asia.

Morgan Stanley saw four key themes in the government’s regulatory reforms, including a push to secure higher demand for natural resources; promote value addition to natural resources; boost local investors’ presence in critical sectors; and attract needed investment in the infrastructure sector through the recently passed land acquisition law.

On steps to satisfy local demand, Morgan Stanley says Indonesia will eventually implement regulations to fulfill the domestic market obligation, which is the amount that must be set aside for local consumption.

The investment bank says the gas sector in the next few years will likely face changes in distribution of natural gas after the ratio for coal to be sold domestically was set at 25 percent of output for 2011. The government introduced the obligation in 2010, when it was set at 24.75 percent.

Indonesia does not apply the domestic market obligation for natural gas on some old contracts, allowing producers to ship all their gas abroad, where they can command higher prices, rather than selling it in Indonesia at below market value.

To stimulate local industry, a 2009 mining law requires that by 2014 miners must process minerals such as iron, nickel and coal into value-added products before shipping them overseas.

In February, the minister of energy and mineral resources threatened to ban the export of metal ores starting in May by revoking the export permits of mining companies. The ministry, however, said mining companies and exporters may be exempted from the ban if they submit business plans demonstrating their ability to process the ores locally.

The regulation has prompted mining producers to doubt the effectiveness of the ruling and to reject project proposals that would not be completed until years after the regulation goes into effect, such as the construction of smelters.

“We believe that the export of unprocessed nickel ores would fall materially with the export ban from 2014 as the entire industry does not have sufficient refining capacity,” Morgan Stanley said, adding that it expects “more regulatory clarity on a potential export ban of unprocessed mineral ores and an export ban of low rank coal over the next 12 months.”

As for the palm oil industry, in which Indonesian authorities want to boost local processing to meet local demand and discourage exports, Morgan Stanley said the government “has already ensured sufficient supply of crude palm oil for the domestic market by levying an export tax” and that it would provide more incentives “to promote investment in high value-added palm oil products such as oleochemicals,” which are used to produce cosmetics.

The government increased the palm oil export tax by 2.5 percent for crude palm oil and by about 2.5 percent to 6 percent for CPO derivative products.

Morgan Stanley also noted that Indonesia is currently revisiting regulations on foreign ownership in key sectors as its domestic economy expands. When Indonesia opened its door widely to investors from 1997 to 2000, the nation lost domestic ownership in some assets.

The government has issued a regulation, signed in February and announced this month, requiring foreign companies to gradually reduce their stakes in local entities after five years of starting production. In the sixth to 10th year, their stake must be reduced by 51 percent, to pave the way for local investors to control Indonesian assets.

“The government has on various occasions tried to limit foreign ownership levels in sectors such as banks, telecoms, etc., but with limited success,” Morgan Stanley said. “However, it appears probable that they will try to gain more regulatory grip on foreign ownership in natural resources sectors except oil and gas.”

As the government attempts to remove outstanding barriers in infrastructure development, especially in land acquisition, Morgan Stanley said it was “bullish on Indonesia’s infrastructure story” and that there would be “a $250 billion opportunity in the infrastructure space in 2011-15.”

Indonesian lawmakers approved on Dec. 16 the land acquisition bill, which reduces the time and cost for purchasing property. However, the law cannot be executed until President Susilo Bambang Yudhoyono approves details on the regulation, such as the land purchase price.

Morgan Stanley also highlighted recent media reports that lawmakers trying to reduce the power of the nation’s antigraft agency would hurt Indonesia’s financial markets by undermining the effectiveness of graft and corruption investigations.

The Corruption Eradication Commission (KPK) was established in 2002 as a superbody that can take over any case from the police or the Attorney General’s Office if it involves corruption.

“There were talks in 2011 to reduce the power of the KPK,” Morgan Stanley said. “The House of Representatives was planning to revise the current Anti-Graft Act and the KPK Act. However, the draft tends to reduce the legal penalties for corruption and allow graft convicts to avoid prison, which would effectively weaken the power of the KPK.”

If the KPK’s power is weakened, the investment bank added, the market will react negatively.

VOA Khmer,  Phnom Penh, March 5, 2012. By Say Mony.  Most Cambodian university students have heard of their country’s fledging extractive industry. But with little access to information, few are aware of how revenue from this industry is being managed. Most of this information remains unavailable, and some are now voicing their concerns about corruption and misuse of those revenues.

“The news on television tells us little about mining extractions,” student Saing Kanha told VOA Khmer. “It only tells the people that companies are coming to extract minerals in Cambodia and that this will benefit the country. But they don’t say whether the revenue will go to the people, or whether the companies or the government are the ones getting it.”

Like Saing Kanha and her peers, other students at the Royal University of Phnom Penh say they are unaware of how the revenue from the oil, gas and mining industry are being managed.

“They are probably reluctant to release the information to the people because they haven’t produced anything yet,” said Long Kiri, a fourth-year chemistry student. “Maybe there isn’t that much revenue.”

Results from a recent survey of 377 university students in the capital by the NGO Forum found a majority did not know about the management and usage of those funds.

Chhit Sam Ath, the NGO’s executive director, said access to such information is necessary for these students, and not just for their studies.

“The knowledge of the revenue is also important because in a democracy all information must be transparent,” he said. “So there will soon be demands by the students for such information. Some information related to the nation must be released.”

Youth advocates say the failure to disseminate comprehensive information on extractive revenues will prevent young people from effectively participating in the country’s development process.

“[Youth] is a group that the government and society must fully invest in so that they become active citizens,” said Cheang Sokha, executive director of the Youth Resources Development Program. “If they have no access to information about extractive industry revenue, there is little encouragement for them to be engaged members of society.”

Civil society groups say that so far the government has granted mining and oil exploration licenses to more than one hundred companies, both local and international, including Chevron, an American company, and Japan’s Jogmec. However, information on the revenue from those licenses is scant.

Cheang Sokha points to personal interest as one factor for the withholding of that information.

“When people have full access to information on extractive industry revenues, the government has to ensure there is transparency in the fund usage, resulting in a loss for those with vested interests in the industry,” he said.

Sim Sisokhaly, head of the mining department at the Ministry of Industries, Mines and Energy, said the government is setting up a commission to manage funds from the industry. Nevertheless, he said, Cambodia will need more experts to fully implement the tasks.

“We are facing a shortage of human resources,” he said. “We see many things to be done, but there are just not enough people to handle them.”

Cambodia is expected to cash in on significant oil revenues starting in December this year, on the twelfth, a date specifically chosen by the government for Chevron to start the country’s first oil production from its offshore wells.

But observers are doubtful the country will see its first drop of oil by then.

These students nonetheless expect that access to comprehensive information about resource revenue will become available.

“Because we live in Cambodia, we must know how much oil and other resources lie underneath its territory, how much revenue the government gets from those resources, and how those revenues are distributed,” said Vann Zolida, an English major at a private university in Phnom Penh.

She said she wants to know what Cambodian people, including students like herself, will get from such revenue.

The six main issues cover the size of mining areas, contract extensions, the amount of royalties to be paid, obligations to process raw materials in Indonesia, divestment and the utilization of local goods and services.

The ministry’s director for minerals and coal, Thamrin Sihite, reported that for mining license holders, in addition to the nine companies, 23 others had partially agreed to renegotiate and five others still disagreed.

“The better progress was made among coal miners because none of them disagreed. Besides the 60 companies, the remaining 14 companies have partially agreed to renegotiate the six main issues,” he told a discussion session at his office in Jakarta.

He also revealed 13 mining firms (five mining license and eight coal of contract holders) were ready to sign amended contracts with the government in the near future.

The signing was actually scheduled this month, but due to several problems, the plan was delayed.

Among the companies are Bangun Benua Persada, Batu Alam Selaras, Iriana Mutiara Idenburg, Karaka Caraka Mulia, Kasongan Bumi Kencana, Paramarta, Selo Argokencono Sakti, Sumber Kurnia Buana, Tambang Mas Sable and Tanjung Alam Jaya.

However, none of the 13 companies are major mining companies like PT Freeport Indonesia, PT Newmont Nusa Tenggara and PT Vale Indonesia (Inco).

“We have also terminated one KK and two PKP2B holders. They are Tripa, Inti Tirta Prima Sakti and Sena Mas Energi Indo. They failed to fulfill investment commitments as proposed,” Thamrin said.

Actually, with the legal basis of the 2009 law, the government could force all mining companies to adjust their contracts; however, in practice, bringing such pressure to bear was difficult because the government’s bargaining position was weak, ReforMiner Institute mining expert Pro Agung Rakhmanto argued.

“The government is afraid the companies will stop their investments in the country. If that happens, the country’s revenues from the mineral and coal mining sector will drop significantly,” he told The Jakarta Post.

The 2009 Law on Coal and Mineral Resources mandated that all mining contracts in the country have to be adjusted two years after the law was first enacted at the latest.

During the discussion, Thamrin also reported the progress of the reconciliation of mining permits (locally known as IUP) issued by regional administrations nationwide. He said as of Feb. 27, there were 10,235 IUPs registered, yet only 4,151, or around 40 percent of them, had a “clean and clear” status, meaning that they were issued by adhering to proper legal procedures.

“IUP reconciliation is very important to figuring out the real numbers for our annual mineral and coal production. It will also be very useful to help us in determining how many mining inspectors need to be deployed in the field,” he explained.

“To motivate miners to report their IUPs and make them ‘clean and clear’, we plan to make classification of companies based on their obedience to the government’s regulations and publish it for the public.”

Newmont Nusa Tenggara president director Martiono Hadianto argued that the renegotiation process was not easy because it not only covered royalties, but also many other company obligations.

He suggested that the government improve legal certainty in the country.

“There are many overlapping regulations, starting from the minerals and coal law, forestry regulations and regulations issued by regional governments. We have made contracts with the central government and therefore all clauses must be respected,” he said.

In the renegotiation process, Martiono hoped that the government could listen to the aspirations of mining companies.