Draught, haze, money crisis have mixed impact on mining

JAKARTA (JP): Director General of General Mining Adjat Sudradjat said the drought, the haze and the rupiah's depreciation against the U.S. dollar had a mixed impact on the mining sector.

Adjat said Thursday that the depreciation of the rupiah against the dollar was expected to raise mining revenue, but the haze had disrupted some mining activities of companies located in West Indonesia.

He added that the drought had troubled coal mining companies which relied on water for power generation or transportation, but coal output was expected to rise because the drought made coal mining easier.

"Rain naturally makes coal mining difficult while the drought makes it easier," explained Adjat.

Adjat said the current depreciation of the rupiah would profit mine operators because they exported most of their product in dollars while paying for operational costs in rupiah.

He said the haze, resulting from brush and forest fires in Sumatra and Kalimantan, had disrupted activities of some companies like gold mining company PT Kelian Equatorial Mining in East Kalimantan.

Kelian's president John Pegler told Reuters that the company was experiencing serious logistic problems moving supplies from the provincial capital of Samarinda, 440 kilometers up the Mahakam river and to the Kelian strip mine, due to the haze and drought.

The fires have not only caused haze problems in those areas but also other provinces in Western Indonesia and neighboring Singapore and Malaysia.

Pegler said operations had been stopped several times due to brush fires, which, combined with dust, cut visibility down to hazardous levels for transportation.

The month-long drought caused by the El Nio weather phenomenon had also decreased Mahakam's water level, hampering river transportation, he said.

Due to the fall in the water level, barges carrying two million liters of fuel had been replaced by vessels carrying 100,000 liters, which was only enough for a half-day operation, Pegler said.

Pegler expected a drop of 10 percent to 15 percent from the company's 1997 production target of 14.5 tons of gold.

Kelian is 90 percent owned by Australia's Rio Tinto and 10 percent by Indonesian firm PT Harita Jayaraya.

Adjat said the drought had also affected nickel mining company PT International Nickel Indonesia (Inco) in South Sulawesi. The company's Soroako hydropower plant did not have enough water to generate a sufficient amount of electricity for operations.

An Inco official expected the company would fail to meet its 1997 production target of 92 million pounds of matte.

Inco is 59 percent owned by Canada's Inco Ltd.

Adjat said that state-owned mining company PT Antam's nickel mine in Southeast Sulawesi was not affected by the drought because it used a fuel-powered plant for electricity, said Adjat. (jsk)