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."