176 applications submitted for mineral exploration
CIPANAS, West Java (JP): Foreign firms and joint ventures have submitted 176 applications for Contracts of Works (CoWs) to explore and develop mineral reserves, an official says.
Simon F. Sembiring, head of the sub-directorate for mining development, said Saturday the applications to Minister of Mines and Energy I.B. Sudjana are part of the so-called seventh generation of CoWs.
"The applications are ready to be discussed with the House of Representatives and the Investment Cooerdinating Board," Simon said.
He said most of the applications were for gold mining projects.
Between 70-80 percent of the investors are from Canada, including the giant mining company Barrick Gold Corp. and Placer Dome Inc.
Both companies came under the public spotlight recently in their failed attempt to join the consortium to develop the Busang mine, once touted as holding the world's largest gold deposits.
Canadian firm Bre-X, which found the gold in Busang, and its local partner Askatindo chose Freeport Indonesia in developing the mine.
Last year, the government approved 69 applications from foreign firms and joint ventures for CoWs to explore and develop mineral deposits.
Bre-X was one of the companies grouped in the sixth generation of contracts. The government subsequently put the approval on hold due to the Canadian firm's dispute with local partners.
Simon said the large number of the applications should not be viewed as an indication that controversy over Busang had no affect on interest in the sector.
He noted that some of the applications were submitted before the Busang case emerged.
"What I can say is that none of the investors have so far sent a formal request to cancel or revoke their applications for contract of works," he said during a workshop on mining here organized by the Association of Indonesian Mining Professionals and the Association of Indonesian Journalists.
Stricter
The ministry will impose stricter enforcement of regulations for holders of the seventh generation of CoWs, Simon said.
These include the stipulation that firms have to realize 80 percent of their planned budget for the first stage of their activities in making general surveys.
The government will terminate their contract if they fail to reach the percentage in one year, with the exception of companies which agree to deposits funds equivalent to twice the amount of the unrealized budget.
Other requirements include that investors must complete the general surveys in one year. The government can grant a maximum of two one-year extensions.
"They can obtain their money back once they have completed their surveys," he said.
The requirement of a minimum 80 percent budget realization also applies to the second phase covering explorations.
Investors are required to complete explorations in three years. The government can grant a maximum one-year extensions.
Simon said similar rules had been in place in the past but had not been enforced.
"This new regulation is aimed at making investors serious, as well as ejecting speculators from mining," he said.
The regulation also limits the mining concession size to a maximum of 62,500.
"One of the reasons for the limitation is to allow the government to better control the mining sector," he said.
According to the official data, between 1967 and 1994 131 COWs were awarded but only 10 have reached the production stage. Ninety others were stopped after failing to discover commercially viable deposits, while the other 41 contractors are still in the exploration stage. (jsk)