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)