Government should not 'mess around with Newmont'<\/p>\n
Former mining minister Mohammad Sadli believes the Busang gold
\nmine hoax is nothing compared to the government's proposal to get
\na stake in another gold mine project, Batu Hijau concession, on
\nSumbawa Island, West Nusa Tenggara. The following is excerpts of
\nhis interview with The Jakarta Post.<\/p>\n
Question: What do you think of the findings of auditor
\nStrathcona Mineral Services Ltd. that the Busang gold discovery
\nwas nothing but a hoax?<\/p>\n
Answer: I have nothing more to say about Busang. It needs
\nfurther investigation as to who perpetrated the deception. Was it
\nthe group of Filipino geologists, the Bre-X people or others?<\/p>\n
One thing that is clear is that all the Bre-X people have
\nbecome rich. For at least three months after they claimed the
\ngold discovery, they reaped financial advantages from the soaring
\nstock.<\/p>\n
Q: Some analysts say Strathcona's finding will have a bad impact
\non Indonesia's mining industry...<\/p>\n
A: It may be true, but only for small companies like Bre-X which
\ndo not have enough funds to work independently. They depend on
\nthe stock markets for cash, so it will be difficult for them to
\nraise money now. But any embarrassment will last for maybe no
\nmore than six months. People will quickly forget it.<\/p>\n
I believe it won't hurt Indonesia's mining industry
\nconsidering there are many successful mining projects here. Even
\nif there are no other discoveries for the next six years, we can
\nsurvive. New discoveries may only create further confusion.<\/p>\n
What concerns me much more is the Newmont case. (The
\ngovernment is asking for a 10 percent stake in the East Nusa
\nTenggara mine. The contract of work was signed in 1986.)<\/p>\n
Q: What are your worries over this?<\/p>\n
A: I do not understand why the Ministry of Mines and Energy has
\nnot yet granted Newmont a construction permit. The contract of
\nwork belongs to the fourth generation. It has passed the House of
\nRepresentatives as well as the presidential office. It has a
\nstrong legal basis. It has to be complied with.<\/p>\n
That's why I said the Busang case is nothing in comparison. It
\nwould be better for us to just forget about Busang. It was a
\nnightmare. Besides, the government suffered no financial loss
\nfrom it. The Newmont case is much more important than Busang.<\/p>\n
Q: To what extent?<\/p>\n
A: It will have a very bad influence on the country. It will lead
\nothers to think that those are the rules of the game in
\nIndonesia. People will think that even a contract of work, which
\nhas legal power, won't give any guarantee of a secure business
\nenvironment.<\/p>\n
Q: Are we losing foreigners' trust?<\/p>\n
A: It will make other companies, like Freeport or Inco, who have
\nbeen working here under certain contracts of work, feel less
\nsecure in doing business. Such an insecurity will pass on to
\ntheir banks, which in turn might cause the companies'
\ndifficulties in raising funds.<\/p>\n
The Newmont project is about to enter the construction stage.
\nA huge amount of money has been spent there. Yet the company's
\nstake composition is to be messed around with. I've never heard
\nanything like this before, in Indonesia or in any other country.<\/p>\n
As a former mining minister, I'm very much concerned about it.<\/p>\n
Q: Can you see why such a situation has developed?<\/p>\n
A: From what I have read from media reports, it's because the
\ngovernment wants a bigger percentage for Indonesians in such
\nprojects, up to 50 or 51 percent. It's actually alright to have
\nsuch a desire, but it should have been done in the negotiation
\nstage, not when the contract has already been approved by the
\nHouse of Representatives as well as the President.<\/p>\n
Besides, there is usually also a clause in the contract
\nrequiring the foreign partners to offer their stake to local
\ninvestors after a certain period of commercial production. Why
\ndoesn't the government wait for that moment? It would be in line
\nwith the law. It doesn't make sense to do it now while the
\nconstruction has not even started.<\/p>\n
It's not acceptable even though the government uses national
\ninterest as the reason for doing it. I don't know what will
\nhappen if it keeps using such reasoning. What then is a contract
\nof work drawn up for?<\/p>\n
Q: How has the mechanism of transferring a foreign stake to local
\npartners after a certain period worked so far?<\/p>\n
A: It is going well. Freeport and Inco are good examples. In
\nprinciple, the government has to comply with the contract of
\nwork. So, if we want a bigger percentage, let's do it within the
\nrules. Once the government breaks the contract, everyone will be
\nworried. It will in turn affect other mining projects.<\/p>\n
Q: Who can prevent such a thing from happening?<\/p>\n
A: As the contract of work was signed by the President, it's only
\nhim who can prevent that from happening. So far it's still only a
\nrequest from the Ministry of Mines and Energy, isn't it? (swa)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/government-should-not-mess-around-with-newmont-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}