Mining News Indonesia: Government to Tender 5 Mining Areas
The government of Indonesia is preparing tenders for five mining areas. These mining areas were previously operated by listed miners Vale Indonesia and Timah under coal mining licenses (in Indonesian: Perjanjian Karya Pengusahaan Pertambangan Batubara, or PKP2B) and contracts of work (in Indonesian: Kontrak Karya, or KK).
Four of the mining areas that are expected to be tendered soon by the Indonesian government (specifically the Ministry of Energy and Mineral Resources) used to belong to listed nickel miner Vale Indonesia. However, the miner returned nine blocks with a total land area of 72,074.66 hectares to the government. This move was based on the agreement contained in the Vale Indonesia KK amendment signed in October 2014.
Bambang Gatot, Director General for Coal and Minerals at the Ministry of Indonesia's Energy and Mineral Resources, said four former Vale Indonesia mining areas and - possibly - one former Koba Tin area are to be tendered soon. Koba Tin is a joint venture between Malaysian Smelting Corporation (75 percent) and Indonesia's listed tin miner Timah (25 percent).
The areas include two coal mining areas - one in Riau and one in Jambi - on Sumatra. Besides the areas that have already been used (hence already in the production stage), the government will also tender an asphalt greenfield area in Buton (Southeast Sulawesi).
Gatot added that if only one investor is interested in an area, then the investor will be appointed directly. Only when there are at least two parties interested in an area, the government will use the tender-mechanism. However, Gatot also emphasized that state-owned enterprises (whether controlled by the central or regional governments) will be the preferred choice.
Ido Hutabarat, Chairman of the Indonesian Mining Association (IMA), appreciates the government's move to tender the mining areas as it should result in more investment in the sector.
