Java not fully open to 'foreign miners': Government

JAKARTA (JP): The government will not fully open the island of Java to foreign mining investors, in order to give local mining investors the opportunity to grow, a top official at the Ministry of Mines and Energy said on Friday.

Rozik said foreign mining investors who want to invest in Java should first set up joint ventures with local companies which already hold contracts on the island and are currently active in exploration or exploitation.

Priority would be given to foreign investors who have been providing technical assistance to active local contract holders, he said.

The ruling will be stipulated in a new mining policy to be introduced by the government in the near future.

"So, foreign investors can't directly apply for a contract of work on the island as they may do on other islands.

"If the government fully opens Java to foreign mining investors, (we are afraid) people will grumble 'Foreigners again, foreigners again'," Rozik said.

Local investors are expected to solve their technical and financial problems by forming partnership with foreign investors, Rozik said.

The government closed Java to foreign investors in the 1980s to protect local investors but it announced a plan recently to review the policy.

The plan, however, drew protests from local investors, who feared foreign investors would dominate the island's mining industry as they do elsewhere in the country.

Java is believed to be rich in mineral resources, including gold, iron sand and industrial minerals.

Publicly listed mining company PT Aneka Tambang currently operates a gold mine in Pongkor, West Java -- the largest mine on the island.

Rozik said that under the new ruling, joint ventures of local and foreign contractors would be allowed to carry out exploration on 25,000 hectares contract areas.

But, after the exploration, they must relinquish most of the contract areas to the government so that they control only 6,250 hectares for production.

The joint ventures must pay the government Rp 100 million in "area allotment fund".

The ministry's data states that 164 mining contracts have been issued to local investors on the island until this month, 119 of which are for exploration and 45 contracts for production.

PT Aneka Tambang holds 25 of the 164 contracts, with the remaining 139 contracts being held by private local companies (129 contracts) and village cooperatives (10 contracts).

The data further states that of the 119 exploration contract holders, 26 are active in exploration and 63 do not carry out exploration regularly. The remaining 30 exploration contract holders have thus far remained idle.

Of the 45 mining companies which have received production contracts, 16 operate routinely and five don't operate routinely. The remaining 24 companies have yet to start production. (jsk)