Indonesia's miners are set for strong growth in 1990s

Indonesia's miners are set for strong growth in 1990s

SYDNEY (Reuter): Indonesia's mining sector is poised for strong growth in the 1990s with five new contracts to be signed this year and reports of another 25 in the pipeline, an ASEAN Mining conference was told.

The Indonesian Mines Department this year lifted a seven-year moratorium on granting contracts of work (CoWs), the preferred system for foreign investors to invest in Indonesia, Mike Andrews, exploration director at Meekatharra Minerals Indonesia, told the conference.

"The government is now actively seeking exploration and encouraging major mining companies to take up CoWs," he said.

"It is a different place to what it was five years ago ... and to attract the major mining houses, Indonesia is systematically exploring the bigger areas of the country."

Large Indonesian companies are playing a greater role in mining as a form of diversification than in 1986/87 when a record 103 contracts of work were granted in the nation's fourth round of contracts.

"Indonesian manufacturing and timber groups are applying for ground and then seeking foreign mining houses to provide funding and operate," Andrews said.

A contract of work is granted to a joint foreign/local company and allows up to 10 years for the exploration and feasibility stages and 30 years to operate the mine.

Andrews said the area of land expected to be licensed in the fifth generation of contracts of work would at least equal if not exceed the area granted in 1986/87.

Aurora Gold Ltd's exploration manager Sandy Moyle said the amount spent on exploration in Indonesia rose sharply in the second half of 1993 following the uptrend in world gold prices.

Indonesia currently produces 13 percent of the Pacific Rim's annual output of 370 tons of gold. It has produced 2,500 ton of gold, 20 million tons of copper and 8,000 tons of silver to date.

"You are starting to see interest from the major and juniors from Canada, the U.S., and Australia," said Moyle.

Much of the attraction is due to the fact that Indonesia is still relatively unexplored with limited previous coverage by modern exploration techniques used elsewhere, he said.

"In 1994, we have seen some joint ventures and far more money is being spent on the ground," he added.

Managing director Malcolm Stevens of Carrie Pacific Holdings Ltd, which has prospects in West Kalimantan, tipped Indonesia as the best exploration nation in ASEAN.

"The country's mining industry has probably developed at a slower pace than its business sectors, but the rate of mining development is currently increasing and is expected to expand even further during the next few years," he said.