RI mining investment climate considered poor, survey says
RI mining investment climate considered poor, survey says
Fitri Wulandari, Dow Jones/Jakarta
Indonesia will attract only less than 1 percent of the global
spending on new mining exploration in 2005 as its poor investment
climate continues to drive investors away from the country,
PriceWaterhouseCoopers said late on Thursday.
Although mining companies view Indonesian mines as highly
prospective, they will not increase their exploration activities
until investment conditions are improved, said Marc Upcroft,
partner at PWC Mining Practice.
He was speaking after releasing a survey conducted by
PriceWaterhouseCoopers on the Indonesian mining sector.
According to the survey, Indonesia spent US$7 million for
exploration in 2003, virtually unchanged from spending in 2002.
In comparison, global spending on new exploration rose to $2.19
billion from $2.05 billion during this period, fueled mainly by
surging mineral prices, he said.
The survey did not provide details on Indonesian exploration
investment in 2004.
Only five of the 30 largest listed mining companies with
global operations currently have operations in Indonesia and even
fewer have ongoing exploration programs, he said.
"If positive changes aren't made, Indonesia's mining industry
will be smaller (than now) in 15 years time as (current) reserves
are depleted and not replaced," Upcroft said without elaborating.
Investors have been staying away from Indonesia since the
financial crisis of 1997 mainly because of regulatory
uncertainties, poor infrastructure and a lack of familiarity with
the local judicial system. Indonesia posted a 26 percent decline
in approved foreign direct investment to $10.3 billion in 2004.
Upcroft said investment in new mines and capacity expansion
will remain low as in the previous years.
But "if investment climate in the mining sector improves,
Indonesia has the potential to become a world class mining
country," Upcroft said.
As for production, he said Indonesia would continue to see an
upward trend in 2005. But the increase in mining output will come
from existing mines and not new mines.
In 2003, Indonesia produced 114.5 million tons of coal, up
from 103.4 million tons in 2002.
Indonesia's gold output rose slightly to 4.39 million troy
ounces in 2003, up from 4.33 million ounces in 2002. The
country's tin output fell to 65,000 tons in 2003, from 67,000
tons in the previous year.
Revenue from mining sector reached $6.09 billion in 2003, up
from $5.17 billion in 2002 due to strong mineral prices.
Data for 2004 are not yet available.