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)