Aurora warns on Indonesian mining investment future

Aurora warns on Indonesian mining investment future

PERTH, Australia (AFP): Indonesia would struggle to attract
foreign investment for mining development unless its political
situation improved, the chairman of Australian mining firm Aurora
Gold Ltd. warned here Wednesday

"Without a reasonable measure of political stability and
without law and order, there is unlikely to be future investment
in mining in Indonesia," chairman Rory Argyle told shareholders
at the company's annual meeting.

Aurora operates the Mount Muro gold operation in Indonesia. In
recent years the operation has been subject to illegal mining,
pit invasions and denial of access to operating and exploration
areas.

Argyle said he saw little chance of improvement in Indonesia
in the short to medium term.

Regionalisation policies being pursued by Jakarta were
fundamentally flawed and had been poorly implemented, he said.

"Despite this being obvious to all participants, there seems,
at least for the time being, little chance of improvement in the
situation while the current leadership vacuum exists and the
prevalent social and political forces in the country continue to
tear it apart rather than unify it," he said.

Indonesia's regional autonomy laws, which came into force on
January 1, delegated supervision of mining activities to district
governments.

However Argyle said there was no financial advantage for
Aurora.

"We are committed to recovering that investment to the extent
possible, including the location of additional reserves within
the contracted work area," he said.

"However, the safety of our people is paramount and we
continue to monitor working conditions very closely."

He said Aurora had aborted proposed development of its Toka
Tindung project in North Sulawesi after rampant illegal mining in
2000.

Meanwhile, the company was continuing to advance its Morobe
project in Papua New Guinea (PNG).

Argyle said the perceived risks facing PNG over the next
decade were very different from those facing Indonesia.

"Despite the very tough economic conditions PNG will
inevitably face over the next few years, the board believes the
country has the potential to provide a relatively stable
environment for mining activities," he said.

"Certainly, the board does not share the negative view of the
country so often portrayed in the Australian news media."