Regional governments are becoming pro-active in supporting the mining industry by issuing more business licenses under the new law, ending a long period of stagnation since the last significant progress in the industry.
Regardless that new implementing regulations are not yet in place, regional governments are issuing new mining business licenses (IUPs) to companies already holding mining area concessions.
According to the new mining law, effective since January this year, a IUP is granted through a bidding process, which will be guided by four implementing regulations that are scheduled to be issued next year.
After a long interval since a mining license was issued in Indonesia, Canadian mineral exploration firm Southern Arc Minerals Inc announced Thursday it had been granted IUPs for East Elang and Sabalong mining areas, both in Sumbawa regency, West Nusa Tenggara.
Covering 9,950 hectares, the Sabalong property is believed to contain high deposits of gold and silver. Southern Arc acquired the rights from Rio Tinto in April 2007. As for the East Elang area, Southern Arc acquired the rights from US mining giant Newmont in March 2006. The area covers 9,670 hectares believed to contain copper and gold deposits.
Southern Arc now has exploration licenses granted by Sumbawa Regency. These are valid for twelve months and can be extended a further 12 months. Southern Arc's president and CEO John Proust said on the company website that the IUPs covered two stages: exploration and commercial production.
The exploration stage, for up to five years, means the firm can pursue exploration activities through up to a feasibility study. Then firm can start commercial production on the site for a minimum of 20 years, with scope for two further 10 year extensions.
The company said, with the issuing of the IUPs, it would now undertake regional mapping and geochemistry surveys, airborne surveys and early-stage CSR activities.
Earlier on Dec. 9, another Canadian exploration company, said it had been granted an IUP for its Miwah gold concession in Aceh province .
"This is a very significant step for Miwah", Michael Hawkins, President and CEO of East Asia Minerals Corporation said on his website.
"The IUP's give us 3 years within which to complete exploration and deliver a positive feasibility study, potentially extendable to 5 years. Thereafter under Indonesian Law, there is automatic conversion of the licences to development licences for an initial 20 year term, renewable for up to another 20 years. We see delivery of the IUP's as giving us excellent long term security of tenure with fiscal stability, and this is further validation of our view that the New Mining Law of Indonesia is globally attractive." he added.
The Indonesia Mining Association (IMA) executive director Priyo Pribadi Soemarno said that the issue of the IUPs for the two companies represented a major step forward for the country's (previously gloomy) mining industry. "For a very long time there has been no new investment in mining. The IUP issuance will send positive signals to investors," he said.