Local stock marts 'should assist mining firms more'<\/p>\n
NUSA DUA, Bali (JP): Jakarta and Surabaya stock exchanges
\nshould set special listing provisions for mining companies to
\nraise funds through the markets to tap the country's big
\nresources potential.<\/p>\n
BMW Siagian, managing director of PT Timah Investasi Mineral,
\nan affiliate of publicly listed state-owned tin miner PT Tambang
\nTimah, said here yesterday that mining was extremely risky and
\nneeded a lot of funding long before commercial operations began.<\/p>\n
He said that in most cases, banks were very unwilling to
\nfinance mining projects before the feasibility study stage was
\ncompleted.<\/p>\n
\"It is therefore clear that the only avenue for cost mining
\ncompanies is through capital markets,\" Siagian told the last day
\nof the two-day 24th Australia-Indonesia business conference here.<\/p>\n
He said that almost all foreign mining companies which had
\noperations in Indonesia had raised funds by floating shares on
\nCanada's or Australia's stock exchanges.<\/p>\n
They could not yet raise funds through the Jakarta or the
\nSurabaya stock exchanges because current listing provisions
\nrequire three years of operation and at least two years of
\nprofitability.<\/p>\n
Felia Salim, a Jakarta Stock Exchange (JSX) director, said the
\nexchange's management would continue to update listing rules to
\nassist the resources sector develop further.<\/p>\n
But it would take time before JSX could develop additional
\nlisting requirements for mining companies, as there were no
\nagreed international standards for reporting mineral resources
\nand reserves.<\/p>\n
The Australian Stock Exchange (ASX) is currently pushing for a
\nset of agreed international definitions for reporting of mineral
\nresources and reserves.<\/p>\n
Chairman of the International Accounting Standards Committee,
\nNorman Miskelly, said that the mining industry was also moving
\ntoward international agreement on standards for reporting of
\nmineral resources and reserves.<\/p>\n
Miskelly said that the recent Busang gold mine debacle in East
\nKalimantan would accelerate the initiative toward international
\nuniformity in reporting mineral resources and reserves.<\/p>\n
Recent testing by drilling and assaying by independent
\ngeological consultant Strathcona Mineral Services Ltd on the
\nBusang gold deposit found that the 7.1 million ounces of gold
\nthat Canadian junior mining firm Bre-X Minerals Ltd claimed were
\nthere, were not.<\/p>\n
\"Under the Australian Code and reporting system, a deception
\nof the nature and magnitude of the Busang incident would not have
\nsurvived for almost two years,\" Miskelly said.<\/p>\n
Siagian suggested the Jakarta and Surabaya stock exchanges
\nlearn from ASX in defining listing requirements for mining firms.<\/p>\n
\"Indeed, Australia will soon become the second largest gold
\nproducer in the world primarily because the domestic stock market
\nmakes it easy for local companies to raise funds cheaply without
\nhaving to seek capital offshore,\" Siagian said.<\/p>\n
He said that listing requirements for mining companies should
\nalso provide the maximum possible degree of protection to public
\ninvestors.<\/p>\n
The economic importance of the resources sector is not yet
\nreflected in its representation on either the Jakarta or Surabaya
\nstock exchanges.<\/p>\n
Only three mining and resources companies, including PT
\nTambang Timah, are listed on the domestic exchanges.<\/p>\n
JSX and ASX have signed a memorandum of understanding to
\ncooperate to implement world best practice standards at JSX. ASX
\nis recognized as a world leader in listing procedures for mining
\ncompanies.<\/p>\n
ASX vice chairman, Michael Shepherd, said the resources sector
\nrepresented about a third of the exchange's total market
\ncapitalization.<\/p>\n
Excluding oil, ASX has the greatest proportion of mineral
\nresources stocks of any major stock exchange in the world.<\/p>\n
\"This reflects the importance of the resources sector in the
\nAustralian economy, where minerals and fuel represent nearly a
\nthird of our merchandise exports,\" Shepherd said.<\/p>\n
He said that when investors bought shares in a company in the
\nindustrial sector, they were buying reasonably predictable
\nreturns from known products or services.<\/p>\n
But when they bought shares in an exploration company, they
\nwere paying for something that did not produce anything, but
\nmight do so in the future. What they were buying was the
\nexpertise and reputation of those involved and the prospects of
\nits tenements.<\/p>\n
These investors had a particular requirement for full, prompt
\nand frequent information about the operations of the companies in
\nwhich they invested.<\/p>\n
\"Our listing rules for all companies are based on continuous
\ndisclosure of price-sensitive information, but we have specific
\nrequirements for additional regular reporting by exploration
\ncompanies,\" Shepherd said. (rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/local-stock-marts-should-assist-mining-firms-more-1447893297",
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