'Govt explanation on mining should satisfy investors'

'Govt explanation on mining should satisfy investors'

JAKARTA (JP): The Indonesian Chamber of Commerce and Industry
believes that the government's clarification of its mining policy
should help bring in investors.

Chamber chairman Aburizal Bakrie said yesterday that the
government's confirmation that it would honor mining contracts of
work (COW) should convince investors of the government's
commitment to welcoming foreign participation in the sector.

"The government's confirmation that it will honor the COWs it
has already signed will ease investor concerns," Aburizal told
journalists at his office.

Bakrie warned that foreign investors would abandon Indonesia's
mining sector, and possibly other sectors, if the government
terminated or arbitrarily changed the provisions of the already
signed COWs.

"It is alright if the government introduces new clauses for
new COWs. But if the government changes the content of the
contracts already signed, it surely will create problems," Bakrie
said.

Minister of Mines and Energy Ida Bagus Sudjana explained
Wednesday that the government would not change its policy
concerning COWs in which the government acts as the principal and
the private entity as the contractor.

Such contracts of works, Sudjana said, serve as an agreement
between the government and an investor or investors, in which the
latter is allowed to mine certain minerals in designated areas.

Sudjana's explanation came amid mounting pressure on the
government to increase its stake in the giant copper and gold
mining company PT Freeport Indonesia Co. and the Busang gold mine
in East Kalimantan.

The government controls a 9.36 percent stake in Freeport and
has asked for a 10 percent share in the joint venture that mines
the Busang gold deposits.

The government is currently evaluating 179 applicants for
seventh generation COWs. The applicants are interested in
exploring and mining for gold, copper and coal in various
locations, including Sumatra (30 firms), Maluku (four firms),
Sulawesi (nine firms), Irian Jaya (six firms) and Nusa Tenggara
(three firms).

The House has approved 70 applications, including two gold
mining projects in Busang, East Kalimantan (Busang II and III),
though the President has yet to sign his approval.

The 70 applications are for sixth generation COWs.

Indocopper

Aburizal, chairman of the Bakrie Group, dismissed any
speculation that PT Bakrie & Brothers was pressured to sell its
stake in Indocopper Investama Corp., a company holding a 9.36
percent stake in Freeport, to the politically well-connected
Nusamba Group.

"We sold our shares of Indocopper entirely on the basis of
business considerations, not because of any pressure or anything
else," Aburizal said.

Bakrie & Brothers has agreed to sell 49 percent, or 10.5
million shares, of Indocopper for US$302.7 million. The share
sales, however, are still subject to approval from Bakrie &
Brothers' independent shareholders.

Aburizal said Bakrie received nearly $15 million in dividends
yearly from its investment in Freeport, which he said was less
than expected. If the money had been invested in Bakrie's core
businesses, Aburizal said, it would have yielded more than $50
million a year.

He also confirmed that Bakrie & Brothers was selling its 20
percent stake in coal mining company PT Arutmin Indonesia. There
are two foreign investors interested in the stake, one from Japan
and another from the United States.

"We would prefer to sell it to domestic investors as long as
their bids are at least the same as those offered by foreign
investors," Aburizal said.

He said Bakrie & Brothers had asked for $50 million for its
Arutmin shares and another $50 million for coal marketing rights.
(rid)