Freeport delays project as tensions row

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)