Mining sector dives amid economic woes
Mining sector dives amid economic woes
JAKARTA (JP): New foreign investment in the country's mining
sector has plummeted this year, but activities of existing
contract holders are expected to significantly increase over the
next five years, Minister of Mines and Energy Kuntoro
Mangkusubroto has said.
Speaking at a hearing with the House of Representatives's
Commission V on Tuesday, Kuntoro said the ministry received only
six applications for mineral contracts of work (COW) from foreign
investors as of last month, compared with 50 applications
throughout last year and 239 applications in 1996.
He attributed the downturn to the drop in prices of mineral
products, including gold, on the international market, the global
monetary crisis and low investor confidence in the country's
political and economic outlook.
A downward trend was also registered in applications for
mineral contracts from domestic investors and for coal contracts
from domestic and foreign investor.
The ministry received 219 applications for mineral contracts
from domestic investors as of last month, as against 414
applications throughout last year and 380 applications in 1996.
It received 11 applications for coal contracts from local and
foreign investors as of last month, compared to 19 applications
last year and 70 applications in 1996.
However, in the next five years the country would register an
increase in the activities of mining companies already awarded
contracts, Kuntoro told the commission which oversees mines and
energy, industry and trade, investment, manpower, environment and
cooperatives.
The government awarded 95 fourth generation mineral COWs
between 1985 and 1990, seven fifth generation mineral COWs
between 1991 and 1994, 65 sixth generation mineral COWs last year
and 38 seventh generation mineral COWs early this year. Most of
the contracts went to foreign mining companies.
Contracts require mining companies to carry out their
activities in stages beginning with a general survey (one year),
then exploration (three years), feasibility study (one year),
construction (three years) and production (30 years).
Kuntoro said holders of the seventh generation COWs would soon
start field activities.
About 101 holders of the previous generation COWs are
currently conducting a general survey, and seven companies have
embarked on exploration.
Sixteen companies are already in the feasibility study stage,
five companies are in the construction stage and 12 companies are
in production.
He added the government was drafting the eighth generation
mineral COWs. Different from previous generation COWs, the terms
will specify obligations of contractors in regard to community
development. (jsk)