Government to revoke over 70 unused mining permits

Government to revoke over 70 unused mining permits

JAKARTA (JP): The government will revoke between 70 and 80
unused mining permits in a move to get tough against negligent
local mining investors, a senior government official said.

"'Unused', means that the government has never received any
progress reports from the investor regarding exploration and
exploitation activities," director general of general mining at
the Ministry of Energy and Mineral Resources Surna Tjahja
Djadjadiningrat was quoted as saying by the Antara news agency
last week.

The government, he said, would transfer the auction rights of
the unused mining permits to the local administrations in their
respective areas.

"This will be in line with the spirit of autonomy," he said
but added that the central government would continue to supervise
the auction of the mining permits.

Unlike foreign mining investors who work under contracts of
work which require the House of Representatives' approval, local
mining investors work under mining permits issued by Surna's
office.

A mining permit is issued to allow a company to carry out
activities related to the exploration, exploitation, processing
and marketing of minerals.

Surna also suspected that the unused mining permits were sold
to third parties.

"In other words, these mining permit holders are just acting
as brokers," Surna explained.

He further admitted that individuals within the directorate
general for general mining were acting as middlemen for these
brokers.

Such actions, he said, hurt the country's investment climate,
and the government must therefore move against them.

"In the past two years, no new applications for mining permits
have been accepted," he added.

Indonesia's investment climate suffers from political and
legal uncertainties, as well as widespread conflicts between
local residents and mining companies.

Mining analyst at PricewaterhouseCoopers Bob Parsons has
warned that if Indonesia was unable to attract new mining
investors, mining production would be severely hurt.

He said Indonesia must spend at least $300 million per year on
exploration in order to discover new resources to sustain the
country's production levels.

However, he said, spending on exploration dropped to $50
million in 1999 from $75 million in 1998. Bob expected this
year's spending to further plunge.

In addition, he said, the country would see at least three
mining firms shut down their operations in the next four years
because they will have run out of reserves. (bkm)