Indonesia state geologists may do mineral surveys
BANDUNG, Indonesia, Jan 24 (Reuters) - Indonesia is considering allowing state geologists to perform initial mineral surveys in order to hasten the process of tendering mining areas and attracting investment, a senior mining official said.
Indonesia is rich in gold, nickel, tin, coal, and copper and is keen to increase revenue from the mining sector, in which several international firms, such as Freeport-McMoran Copper&Gold (FCX.N), and Newmont Mining Corp. (NEM.N), already operate.
Under a new mining law passed last December, mining areas are to be offered via tender, particularly for areas designated as state reserves. [ID:nJAK386565]
But industry officials say the scheme may deter investors because of a lack of data on the country's mineral resources.
To remedy this situation, the energy and mines ministry is discussing a plan for state geologists to conduct initial mineral exploration, Hadiyanto, the head of the Geological Resources Centre at the Ministry of Energy and Mines, told Reuters.
"Once we finish collecting the data, we will submit it to the ministry," Hadiyanto said in an interview on Friday. "It will speed the tender process. It will be more convenient for investors because they don't have to do it on their own."
Data from the initial exploration would help investors boost success rates in finding mineable mineral resources, he said.
If the plan is approved, the centre, which has 200 geologists, would collaborate with universities and other research institutions, Hadiyanto added.
In the past, state geologists often did initial exploration to survey mineral resources but the practice stopped after regional autonomy was introduced in 2000 and gave local mining offices control of their own mineral resources.
The halt led to mineral resources data becoming outdated, since local governments did no exploration, forcing the central government to rely on exploration data from mining companies.
Local governments also often issued mining licenses without the proper data, leading to losses for investors in cases where reserves may have been less than stated, Hadiyanto said.
Data collected from initial exploration will also put the government in a good bargaining position when negotiating with investors in tenders, he said.
"The government should be allowed to do exploration in mining areas so that we know the resources we are offering to investors," Hadiyanto said. "It will allow the government to get a good deal during tenders."
Indonesia's new mining and coal law has been criticised as discouraging major investment in mining, because of a requirement to process mineral into metal domestically, either by setting up smelters or processing raw material at independent smelters.
Priyo Pribadi Soemarno, executive director of the Indonesian Mining Association, said the move to allow exploration by state geologists would help investors make decisions on how economically feasible it was to develop a mining area.
"Logically, data should be ready between 3 to 6 months after the new mining law was passed," Soemarno said. "The system should be made simple and easily accessible for investors so they can study it before proceeding to join tenders."
But in order to make the data available in a timely way, the centre would have increase the number of geologists, he said.
The centre's latest data shows Indonesia has mineable reserves amounting to 547 million tonnes of nickel, 112 million tonnes of bauxite and 43 million tonnes of copper.
Mineable reserves of tin stand at 336,911.65 tonnes measured in terms of refined tin, while gold stands at 4,341 tonnes.
"The resources could be much higher because many small mining firms don't report their resources," Hadiyanto said.
(Additional reporting by Karima Anjani) (Editing by Clarence Fernandez)
Indonesia is rich in gold, nickel, tin, coal, and copper and is keen to increase revenue from the mining sector, in which several international firms, such as Freeport-McMoran Copper&Gold (FCX.N), and Newmont Mining Corp. (NEM.N), already operate.
Under a new mining law passed last December, mining areas are to be offered via tender, particularly for areas designated as state reserves. [ID:nJAK386565]
But industry officials say the scheme may deter investors because of a lack of data on the country's mineral resources.
To remedy this situation, the energy and mines ministry is discussing a plan for state geologists to conduct initial mineral exploration, Hadiyanto, the head of the Geological Resources Centre at the Ministry of Energy and Mines, told Reuters.
"Once we finish collecting the data, we will submit it to the ministry," Hadiyanto said in an interview on Friday. "It will speed the tender process. It will be more convenient for investors because they don't have to do it on their own."
Data from the initial exploration would help investors boost success rates in finding mineable mineral resources, he said.
If the plan is approved, the centre, which has 200 geologists, would collaborate with universities and other research institutions, Hadiyanto added.
In the past, state geologists often did initial exploration to survey mineral resources but the practice stopped after regional autonomy was introduced in 2000 and gave local mining offices control of their own mineral resources.
The halt led to mineral resources data becoming outdated, since local governments did no exploration, forcing the central government to rely on exploration data from mining companies.
Local governments also often issued mining licenses without the proper data, leading to losses for investors in cases where reserves may have been less than stated, Hadiyanto said.
Data collected from initial exploration will also put the government in a good bargaining position when negotiating with investors in tenders, he said.
"The government should be allowed to do exploration in mining areas so that we know the resources we are offering to investors," Hadiyanto said. "It will allow the government to get a good deal during tenders."
Indonesia's new mining and coal law has been criticised as discouraging major investment in mining, because of a requirement to process mineral into metal domestically, either by setting up smelters or processing raw material at independent smelters.
Priyo Pribadi Soemarno, executive director of the Indonesian Mining Association, said the move to allow exploration by state geologists would help investors make decisions on how economically feasible it was to develop a mining area.
"Logically, data should be ready between 3 to 6 months after the new mining law was passed," Soemarno said. "The system should be made simple and easily accessible for investors so they can study it before proceeding to join tenders."
But in order to make the data available in a timely way, the centre would have increase the number of geologists, he said.
The centre's latest data shows Indonesia has mineable reserves amounting to 547 million tonnes of nickel, 112 million tonnes of bauxite and 43 million tonnes of copper.
Mineable reserves of tin stand at 336,911.65 tonnes measured in terms of refined tin, while gold stands at 4,341 tonnes.
"The resources could be much higher because many small mining firms don't report their resources," Hadiyanto said.
(Additional reporting by Karima Anjani) (Editing by Clarence Fernandez)