Freeport delays project as tensions row
JAKARTA (JP): Copper and gold mining company PT Freeport Indonesia and sixteen other mining companies have suspended their exploration activities for security and financial reasons, a top official at the Ministry of Mines and Energy Rozik said on Friday.
Director General of General Mining Rozik B. Soetjipto said Freeport had decided to suspend its exploration activities on its Block B contract area from May 15 to Aug. 15 on the advice of the province's security officials.
Rozik refused to elaborate on security problems in the area, but tension has reportedly been on the rise in many parts of the province over the past several months due to increased separatist movement activities.
Freeport operates a huge copper and gold mine in the Grasberg area in the country's easternmost province.
Aside from the Grasberg area, Freeport holds two other contract of works: on the 24,700 acre Block A and the 3.25 million acre Block B.
Rozik said Freeport was continuing exploration activities on Block A.
He said two other companies in Irian Jaya -- PT Irja Eastern Minerals and Nabire Bakti Mining -- had also decided to suspend operations from May 15 to Aug. 15 for security reasons.
Another 14 mining companies -- nine gold mining companies and five coal mining companies-- have suspended their exploration activities in Kalimantan and Sulawesi for up to one year, due to financial difficulties.
The gold mining companies are PT Barito Intan Mas (Central Kalimantan), PT Permata Kalindo (Kalimantan), PT Pasifik Masao Mineral (Central Kalimantan), PT Pursuit Mahakam West (East Kalimantan), PT Pursuit Mahakam East (East Kalimantan), PT Uncak Kapuas Mining (West Kalimantan), PT Samideco Metalindo (Southeast Sulawesi), PT Pelsart Tambang Kencana (South Kalimantan) and PT Yamana Kalindo One (East Kalimantan).
Rozik did not mention the names of the five coal companies.
New investors
Rozik added that despite the economic and political turmoil, investment in the country's mining sector was generally buoyant, drawing attention to the fact that 97 mining companies continued exploration efforts across the country.
He said the country's mining companies had pledged a total investment of US$1.29 billion this year, $463 million which is to be spent by mining companies already in production, with the remaining investment to be made by companies still in stages of exploration or construction of mines.
He said up to April, mining companies had invested a total of $59.2 million.
Rozik said 16 companies, mostly from Canada, had filed applications for eighth generation contract of works (COW), which are still being drafted.
"Some of the 16 applicants are major mining companies," he said.
Different from previous generation COWs, the draft eighth generation COWs will emphasize the investors' obligation to protect the environment and promote community development.
The Indonesian Mining Association recently dismissed the draft eighth generation COWs as "too detailed" on investors' community development and environmental protection obligations. The organization said the COW could discourage new investors.
Rozik said as opposed to previous COWS, the eighth generation COWs would also specify the levies and retributions that investors have to pay local authorities.
He said the ministry had asked for input from a range of parties, including regional authorities and mining communities, for the drafting of the eighth generation COWs. He said he expected the government to approve the draft contract later this year. (jsk)