JAKARTA. PT Pukuafu Indah, a shareholder of copper miner PT Newmont Nusa Tenggara, has filed a judicial review request over the controversial 2009 Mining Law, which requires mining companies to process and refine minerals before exporting.
In a preliminary hearing on Thursday, Pukuafu Indah argued that the law would be detrimental to the company, particularly articles 169b and 170, which respectively mandate adjustments in mining firms’ contracts of work (CoWs) and requires miners to process minerals in domestic smelters.
Pukuafu Indah currently holds a 17.8 percent stake in Newmont Nusa Tenggara.
“The applicant argues that a CoW must be upheld and must be obeyed by related parties until its expiry,” Pukuafu Indah’s legal team, led by Wisye Hendrawati, told the panel of judges.
Newmont Nusa Tenggara is among 34 mining companies with CoWs in Indonesia. Newmont and the government signed the CoW in 1986, which highlights the company’s right to carry out exploration and exploitation in its working area in West Nusa Tenggara and sell its products overseas.
Tensions arose when the law was passed in 2009. Under the law, the government has the mandate to change the mining contract regime to a licensing regime.
The law states that a CoW is upheld until its expiry but mandates adjustment of the contract to comply with the law within one year. Expiry dates of CoWs vary among companies. Once CoWs expire, however, they should be changed to licenses.
The law also requires miners to process and refine minerals in domestic facilities.
The government implemented a regulation that effectively bans the export of mineral ore at the beginning of the year.
Newmont Nusa Tenggara had filed for international arbitration against the export ban in July. However, it later decided to withdraw the appeal following a threat from the government that continuing arbitration would cost the company significantly, including possible contract termination.
Newmont Nusa Tenggara — the subsidiary of US-based Newmont Mining Corporation — has signed a memorandum of understanding (MoU) with the government on principal agreements over the contract. The principal agreements will be adopted into a contract amendment now in the drafting process.
During Thursday’s hearing, the panel of judges asked Pukuafu to revise its appeal within 14 days before the next hearing.
The Energy and Mineral Resources Ministry’s mineral and coal directorate general, R. Sukhyar, regretted Pukuafu’s legal maneuver.
“We don’t understand why the shareholder has submitted this appeal when our relations with Newmont Nusa Tenggara are improving,” Sukhyar said, referring to recent tensions related to the arbitration appeal.
“We hope Newmont Nusa Tenggara can advise the shareholder [not to continue its appeal],” he said.
Sukhyar said the legal move was not expected to influence the drafting of Newmont’s contract amendment.
Pukuafu’s move deals another blow to the law. In February, mining industry players, namely Indonesia’s Mineral Entrepreneurs Association (Apemindo), PT Harapan Utama Andalan, PT Pelayaran Eka Ivanajasa and Koperasi TKBM Kendawangan Mandiri, submitted their request for a judicial review to the court. A ruling from the court is expected soon as a series of hearings have been completed.
The Energy and Mineral Resources Ministry’s legal bureau head, Susyanto, said the government would defend the law.
“We argue that a law is stronger than a contract because the law is the people’s will. We regret the legal move, yet admit that it is their constitutional right to file such requests. We are consistent and will defend the law,” Susyanto said.
Newmont Nusa Tenggara president director Martiono Hadianto did not immediately respond to text message requesting comment on the matter.
Source : The Jakarta Post, October 24, 2014