More firms apply for mining contracts

More firms apply for mining contracts

JAKARTA (JP): More foreign and joint venture companies are
applying for contracts of work (COWs) to explore and develop
mineral resources in Indonesia, a Ministry of Mines and Energy
source said yesterday.

The source said that "in January to April alone, the ministry
has received dozens of applications."

The Directorate General of General Mining was processing the
applications before submitting them to the minister of mines and
energy, I.B. Sudjana, he said.

As of last December the ministry had received 176 applications
mostly from Canadian exploration and mining companies.

The applications are to be part of the seventh generation of
the ministry's COWs.

The ministry says President Soeharto approved 78 sixth
generation contracts of work this month.

The head of the sub-directorate for mining development, Simon
F. Sembiring, has corrected The Jakarta Post's report that the
ministry would limit COW holders to 62,500 hectares in the
seventh generation of COWs.

He said contractors could apply for bigger areas for general
surveys but could only retain a maximum 65,500 hectares
of contract area at or before the end of the feasibility study.

Mining activities are done in the following phases: general
survey (one year), exploration (three years), feasibility study
(one year), construction (three years) and production (30 years).

The new regulation stipulates contractors have to relinquish
25 percent of their original contract area to the government at
or before the end of the general survey phase.

They then have to relinquish another 25 percent at or before
the second year of exploration, and another 25 percent at or
before the end of the feasibility study.

After being reduced 25 percent at or before the end of
feasibility study, the contract area could not be more than
62,500 hectares, Simon said.

In the past, contractors had to gradually relinquish 75
percent of their original contract area to the government and end
up keeping only 25 percent of the area whatever the size was.
(jsk)