New Mining Law

Areas of Concern
due to the transitional provisions

IMA
December 2008
 Mining Law:
Transitional Provision
• Article 169: At the time of this Law takes effect:
(a).Contracts of Work and Coal Mining
Exploitation Working Agreements existing before
the promulgation of this Law shall remain
effective until their expiry.
(b).The provisions that are found in the Contracts
of Work and Coal Mining Exploitation Working
Agreements as referred to in paragraph (a) shall
be adjusted at the latest 1 (one) year as of the
promulgation of this Law, except for the
provisions concerning state revenues.
 Mining Law: Areas of Concern

•Fiscal Provisions
•Limitation of Mining Area Size
•Limitation of term of operation
•Limitation related to License System
•Smelting domestically
 Fiscal Provisions
• The Mining Law does not
recognize a “nail-down”
system.
• The Mining Law
introduces a mandatory
additional payment
obligation, i.e., 10% of net
profit that should be paid
to Central Government
(4%) and Local
Government (6%).
Questions & notes:
• Does it mean royalty and
taxes will be subject to
laws and regulations
prevailing from time to
time?
• IMA to request PWC to
conduct financial analysis
with regard to the 10%
additional payment and
2007 Government
revenues from the mining
industry plus the relevant
worldwide comparison.
Limitation of Mining Area Size
• At the stage of Questions & notes:
Exploration, the • IMA to explain that the
maximum size of area is size limitation is not
100,000 ha. sufficient and proper

• At the stage of • Essentially, a larger

Production, the maximum
size of area is 25,000 ha.
exploration area is better
for the Government
because the data will be
owned by the
Government
 Limitation of term of operation
• At the Production Questions & notes:
stage, there is a • Why 20 years? Is
limitation of operation there any relevant
term, i.e., 20 years as study as a basis to
of production with two determine the figure?
times possible • How about the
extensions, each for existing COWs?
10 years.
Limitation related to License System

• The Mining Law no Questions & Notes:

longer recognizes the • IMA to ask
Contract of Work explanation on what
regime for COW will happen if COWs
extensions. expired.
• For a COW
extension, there is no
alternative other than
license.
 Smelting Domestically
• There is the obligation to Questions & Notes:
build processing and • What is the consequence
refinery capacity if after 5 year, a mining
domestically within 5 license holder cannot
years as of promulgation meet the requirement?
of the Mining Law. • And, there is none else
capable to process the
products?
• Why not leave it up to the
market?