MAC: Mines and Communities

Indonesian decree backs 13 mining firms

Published by MAC on 2004-05-19

Indonesian decree backs 13 mining firms

Planet Ark, Indonesia

May 19, 2004

Jakarta - Indonesia will allow 13 mining firms, including Freeport McMoRan Copper and Gold Inc and PT International Nickel Indonesia, to continue mining operations in the country, according to a presidential decree that was seen by Reuters yesterday.

The decree, which was signed on May 12 by President Megawati Sukarnoputri, stated those companies that signed mining contracts prior to the introduction of a law banning open-pit mining in forested areas would be allowed to continue operating for the term of their contracts.

Many mining projects have been on hold since 1999, when the forestry law was passed. The statute has generally not been enforced. Others companies covered by the decree include Indonesian nickel and gold producer PT Aneka Tambang Tbk (Antam), PT Nusa Halmahera Minerals, majority owned by Newcrest Mining Ltd, Indominco Mandiri, owned by Banpu and PT Weda Bay Nickel, majority owned by Canada's Weda Bay Minerals

"The decision has given a certainty to the firms for investment in the sector," Simon Sembiring, director general mineral resources at the government's mines and energy ministry, told Reuters.

"I expect, with this decision, output in nickel, coal and gold mining will be boosted in the future. This decision has been awaited by the mining firms," he added.

Indonesian officials said in March that a decree would be issued. The law's defenders say the legislation is needed to protect Indonesia, which is rapidly losing tropical forests from illegal logging and a variety of other factors, including mining.

Mining analysts have said the forestry law was broad enough to apply to virtually all mining operations in Indonesia if it were to be fully enforced.

Indonesia has an abundance of coal, gold, copper, nickel and tin along with natural gas and oil. Most of the metals and some of the energy resources are located in the eastern part of Indonesia. Indonesia had previously said it expected output of copper, gold and coal to rise in 2004 despite the impact of the forestry law.

The mines and energy ministry's predictions for output
(in tonnes): 2004 2003 Copper concentrate 3,200,000 3,149,154 Copper 1,200,000 965,872 Coal 122,817,000 111,942,636 Gold 135 132

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