Indonesia's mining rules change again in new ruling

JAKARTA Thu Nov 22, 2012 8:30am EST

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JAKARTA Nov 22 (Reuters) - Indonesia's constitutional court partially upheld the latest challenge to the country's mining laws on Thursday, in a verdict that sees regional governments gaining more control over the use of land for mining.

This is the fourth challenge to the country's mining law this year, reflecting a growing tussle for resource revenues from the world's top exporter of thermal coal, refined tin and nickel ore.

The case, brought by H. Isran Noor, the head of coal-rich East Kutai regency, sees regional governments gaining more say in the zoning of mining areas, but will not have major impacts on the industry, mining legal experts say.

"The challenge to the provisions of the 2009 Mining Law dealing with mining areas will, most probably, not have much impact as it should not undermine the status of already issued IUPs," licensed foreign advocate Bill Sullivan said, referring to mining permits.

The ruling creates uncertainty over what criteria are used by regional administrations to determine mining areas, Rick Beckmann senior foreign legal counsel at law firm Norton Rose, said, adding that the issue of mining permits for foreign investment companies (PMAs) could also be a grey area.

"It's not like the BPMigas decision, but it certainly will cause some confusion," Beckmann said, referring to the recent constitutional court verdict that dissolved Inonesia's oil and gas regulator.

Indonesia's mining law may face a fifth review in the coming months according to lawyers for Indonesia's second-largest Muslim organization, Muhammadiyah, the same group that filed the case against BPMigas.

East Kutai is home to a site owned by London-listed Churchill Mining that has taken a dispute over its mining permit to international arbitration.

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