Mine prospecting falls in economic, political crisis

Mine prospecting falls in economic, political crisis

JAKARTA (JP): Mining explorations in the country have
significantly dropped this year amid the monetary and political
turbulence, the Indonesian Mining Services Association (Aspindo)
said on Tuesday.

Association secretary general Umar Sirait said many foreign
companies, which dominate the country's gold explorations,
delayed their exploration activities due to the slump in the
world's gold prices and uncertainties in the country's political
situation.

Many local investors, which dominate the country's coal
exploration, also delayed their explorations following the sharp
depreciation of the rupiah against the dollar since the middle of
last year, he added.

"We estimate preliminary mining activities, including
exploration, feasibility study, have dropped by 40 percent this
year," Umar told The Jakarta Post.

As a result, Umar said, the majority of the about 400 mining
service companies of the country -- mainly comprising local
companies -- which provide services to support such activities,
currently toiled to survive amid the monetary and political
crisis.

Mining sector is one of the few sectors which are believed not
only to survive but also prosper amid the downfall of the rupiah
since its products are for exports.

However, according to Umar, the windfall profits, which have
been pouring into the mining sector amid the monetary crisis, are
mostly enjoyed by the mining companies which are in production
together with a few giant mining service companies which provide
heavy equipments to support their operations.

"Most of the mining companies would rather handle all their
activities by themselves than hiring mining services companies
once they start production," Umar said.

Heavy equipment providers to productive mining companies
include PT Pama Persada, John Holland of the Netherlands, PT
Petrosea, and an Indonesian-Australian joint venture Dharma
Hemwa.

"The rest of the mining services companies provide services
like field surveys, drilling, laboratory tests and environmental
impact analysis, are now on the brink of collapse due to the lack
of orders," Umar said.

Umar called on the local businessmen to put their money for
gold explorations, saying they would get a high return on their
investment.

He said investors need to invest only between $1.5 and $4
million to complete the exploration of one contract area, but if
the explorations are successful, they can easily sell the
exploration results for twice as much to foreign mining
companies.

"Thus far, our businessmen are not interested in mining sector
because they thought it needs a lot of investment.

"It's true that the construction of mining field needs a lot
of money. But, the fact is that you can make a lot of money by
only doing exploration," Umar said, adding that many foreign
exploration companies have came to explore gold in the country in
an expectation that they can later sell the exploration results
at high prices to mining companies. (jsk)