Minister told to stop mining uproar
Minister told to stop mining uproar
JAKARTA (JP): President Soeharto yesterday ordered Minister of
Mines and Energy Ida Bagus Sudjana to explain the government's
mining policy and end the current debate on Freeport and Busang
mining projects.
Sudjana told journalists after meeting with Soeharto that he
would give the explanation after the next cabinet meeting,
scheduled on Feb. 5.
"Bapak President (Soeharto) has ordered me to prepare an
explanation on the government's policy, especially that on the
mining sector, because many differing opinions have come to the
surface," Sudjana said.
The minister, however, did not specifically refer to the
current debate on the government's stake in PT Freeport Indonesia
and the disputed Busang gold mine in East Kalimantan.
But it is widely known that the government is under public
pressure to increase its stake in the Freeport and Busang
projects.
Sudjana said the government's explanation would also cover its
participation in mining ventures so that "the public knows that
the government's income (from the venture) is not from dividends
only but also from other sources".
In addition to dividends, the government collects dead rent
and royalty from such ventures. The government also collects
various taxes, including income tax and value-added tax.
Sudjana said the government would not increase its stake in
the planned Busang venture due to financial constraints.
"It is impossible for the government to allocate all of its
funds to exploit such a high-risk project because the government
also needs to develop other sectors," Sudjana argued.
The Busang gold mine, believed to contain 57 million ounces of
gold reserves, is being disputed by Canadian mining companies
Barrick Gold Corp. and Bre-X Minerals Ltd., and later Place Dome
Inc.
The government has set Feb. 17 as the deadline for
negotiations, including with their local partners.
If they fail to achieve an agreement by the set date, the
government would likely find other investors, Sudjana said.
The government, however, has decided to only take a 10 percent
stake in the planned Busang venture. But it has encouraged local
private firms to take more shares in the venture to increase the
Indonesian stake.
Several politicians such as Amien Rais and analysts such as
Rizal Ramli sharply criticized the government recently for only
asking for a 10 percent stake in the Canadian joint venture.
They also demanded that the government review Freeport's work
contract and even suspend negotiations with foreign partners in
the Busang gold project alleging that the current arrangement
ignores the interest of the people.
Freeport Indonesia, 81.28 percent owned by U.S.-based Freeport
McMoRan Copper and Gold Inc., operates one of the world's largest
copper and gold mines in Irian Jaya.
The government only controls 9.36 percent of the venture. The
other 9.26 percent stake is held by PT Indocopper Investama
Corporation -- an affiliate of the Bakrie Group.
Sudjana contended that by taking a minority stake it did not
mean that the government was in a weaker position.
"If some people are of the opinion that we are in a weak
position, let's prove whether it is true or not. Let's wait for
the explanation," Sudjana said. (rid)