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Monday, 25 January 10
INDONESIAN GOVERNMENT TO ISSUE REGULATION FOR IMPLEMENTATION OF MINERAL AND COAL MINING BUSINESS ACTIVITIES LAW NO.4 / 2009 SOON


COALspot.com (Indonesia): The government regulation concerning implementation of mineral and coal mining business activities Law no.4 / 2009 is expecting to issue anytime in January / February 2010. The government will address coal benchmark price issues and share divestment issues in this upcoming regulation to attract more new investment in the mining sector. The government is planning also to issue 4 new regulations attached to the new mining and coal law in 2010.

SHARE DIVERSTMENT
Holders of IUP or IUPK whose 100% shares (hundred percent) are owned by foreigners, is obliged to divest at least 20% (twenty percent)  their shares directly to the Government, local government, state enterprises, enterprises, or national private enterprise. A divestment  shall be made not later than 90 (ninety) working days of the end of fifth year of production of mine. The Government, the regional governments, State-Owned Entities, and Region-owned Entities must submit their expression of interest within 60 (sixty) working days from the date of offer received.

If the Government and the Regional Governments are disinterested in the purchase of divested shares then, the shares shall be offered to national private entities within 30 (thirty) working days. Payment and delivery of the purchased shares by the Indonesian participants shall be made within 90 (ninety) working days of the date of expression of interest. If there is no party interested to buy offered shares within time frame then, divestment shall be made in the following year.

"100% foreigners owned coal mines, are obliged to divest at least 20% of its shares to Indonesians end of 5th year of production"
Ancillary provisions on share divestment shall be governed by Regulation of the Minister, which will be expecting to follow government regulation.

COAL BENCHMARK PRICE
The Minister of Energy and Mineral Resources, shall determine benchmark prices for coal.  Any coal sale by IUP / IUPK holders, must obtain approval from the Minister prior to sales. Ancillary provisions on determination of benchmark coal prices shall be governed by separate ministerial regulation. IUP/IUPK holders also obligate to report to the Minister, the governors or the regents/mayors at least (1) once a month, accompanied by documents/conclusive proofs supporting their production and sales.

The report must includes selling prices, sales volume, quality of coal and supply point.

A benchmark steam (thermal) coal price shall be determined with reference to the average coal prices indexes published by internationally acknowledged institutions.

Benchmark coal prices shall be determined basis Free on Board (FOB) Mother vessel. If a delivery point of coal sale is not FOB Mother vessel, then coal prices must reflect benchmark price  added with or deducted by adjustment of cost approved by the Minister.
(cs)



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