Newmont finally obtains mine building permit

JAKARTA (JP): After waiting more than six months, Newmont Gold Corp. of the United States said yesterday it had been given the green light to build its gold and copper mine at Batu Hijau on Sumbawa island in West Nusa Tenggara.

In a statement, Newmont said construction would begin "immediately" with work on the port, generators, roads, accommodation and telecommunication facilities.

Newmont said it had been given all the other principal government approvals including the ANDAL (Environmental Impact Analysis) permit, issued last October, and a forestry permit -- allowing the forest area to be used for mining -- last week.

"Construction of the US$1.9 billion project is expected to take three years," it said.

Newmont said Batu Hijau contained reserves of 12.1 million ounces of gold and 10.6 billion pounds of copper.

The mine is expected to produce an average of 550,000 ounces of gold a year and 270,000 tons of copper in a 20-year mine life.

Initially it will employ 1,000 people but this will increase to 5,000 during peak construction. It will permanently employ 2,300 people when operations begin.

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Newmont made headlines earlier this month when the government demanded a 10-percent stake in the project for the sake of national interest.

Private local firms reportedly interested in the Batu Hijau mine include the Barito Pacific group, controlled by businessman Prayogo Pangestu, and the Citra group, controlled by President Soeharto's eldest daughter, Mrs. Siti Hardiyanti Rukmana.

On Wednesday, Newmont said it refused to bow to the demand and wanted to stick to the terms of its contract of work, received from the government in 1986.

President of Newmont Nusa Tenggara, Eric Hamer, was quoted by Reuters as saying yesterday that he was "very pleased" with the construction permit.

"Logic prevailed and we got the permit to construct ... we are under way," he said. "Production, if we stay on schedule and have not missed too much time, should begin in early 1999".

Yesterday's statement said the government had issued an approval of a partnership agreement between Newmont and Sumitomo Corp. of Japan, which would give Sumitomo a 35-percent stake in the project.

As a result, Newmont now owns 45-percent, Sumitomo 35 percent, and PT Pukuafu Indah -- controlled by local businessman Yusuf Merukh -- 20 percent.

Newmont began exploration in Indonesia in 1984 and was granted a contract of work for an area which included Batu Hijau in 1986.

Newmont said the government had delayed the construction permit for more than six months and the approval of its partnership with Sumitomo.

Confirmation of the government's demand for a 10-percent stake in Batu Hijau came shortly after an independent consultants' report on the Busang mine in East Kalimantan concluded that geological samples had been falsified and that the mine contained no significant gold deposit. (pwn)

Editorial -- Page 4