Janeman Latul & Venisa Tjahjono – Mining industry representatives said on Friday they were confused by a recently issued regulation restricting the work contractors were allowed to perform for mining concessionaires, saying it failed to clearly explain what contractors could and could not do.

Industry representatives said that Article 10 of the Sept. 30 regulation, which provides that "the holder of a mining concession or special mining concession must itself perform mining, processing, and refining work," was particularly problematic, as much of this work was currently carried out by contractors.

The regulation could cause problems for multinational contractors like PT Thiess Indonesia, a unit of Brisbane-based Thiess, which is employed as a mining contractor by PT Bumi Resources, Asia's biggest thermal coal producer. Article 5 also provides that contracting work must be given to domestic companies for a first right of refusal before foreign companies could be involved.

A Thiess representative was not available for comment.

One analyst said that if the regulation was implemented to the letter, many contractors and concessionaires would find themselves in trouble, as they would have to radically reorganize their operations.

Sara K Loebis, corporate secretary of PT United Tractors, the country's largest supplier of heavy equipment, said her company was also confused by the regulation.

"We're unsure about the difference between 'stripping,' which the regulation allows us to do, and mining, which we are prohibited from doing, as it's frequently very difficult to differentiate between the two," she said. "Our legal team is currently studying the regulation."

United Tractors is the parent of PT Pamapersada Nusantara, the country's biggest mining contractor.

Alwinsyah Loebis, president director of PT Aneka Tambang, the state-owned gold and copper miner, said that his company's legal department was also studying the regulation.

Dileep Srivastava, senior vice president of Bumi Resources, the country's biggest coal producer and one of the Pamapersada's main employers, said he was not aware of the regulation and would have to study it first before commenting.

When asked for clarification about whether mining contractors could continue to perform main mining work, Bambang Setiawan, the director general of coal, minerals and geothermal energy, gave an inconclusive response.

"I am not saying they can. As long as they follow all of the requirements in Article 10. What is the process of mining? It's digging, stripping, blasting and transporting. I think that's all clear enough. What more do they want?"

Edwin Sinaga, president director of brokerage PT Finacorporindo Nusa, said the new regulation was intended to prevent small, local government-issued concessions from being sold to contractors, which was already a widespread practice here.