Rio Tinto sings praises of RI mining investment outlook

Rio Tinto sings praises of RI mining investment outlook

JAKARTA (JP): The giant Anglo-Australian mining company Rio
Tinto Group said on Monday that Indonesia remained one of the
world's most attractive countries for mining investments despite
the current economic and political turmoil.

Noke Kiroyan, president of PT Rio Tinto Indonesia, which
coordinates all of Rio Tinto's business in the country, said that
the country's appeal is its geological structures, which are
believed to contain a rich variety of minerals.

Also, the contract of work (COW) system applied by the
government to the mining industry gives assurances to investors
over the future of their long term investments, Noke said.

"Thus far, the government has consistently honored all the
COWs it has signed. As such, investors are convinced that no COW
will be breached," Noke said.

Rio Tinto Group's chief executive officer Leon Davis, during a
recent visit to Indonesia, also praised the COW system and the
government's commitment to honor the contracts.

"Indonesia has acquired a favorable reputation in global
mining circles because the administration has established a sound
context for business operations ... the concept of the Contract
of Work system is being copied by other nations," Davis said in
his speech during the Indonesia Forum conference on Nov. 20.

Many foreign investors have been discouraged by the political
turmoil which has been battering the country since the downfall
of former president Soeharto in May.

However, Noke said, Rio Tinto, was still optimistic about the
country's prospects, as it believed the current political turmoil
was a necessary step the country must take to reach real
democracy.

"We hope all (political) problems will be solved in due
course. If this situation goes on for five years, the country
will collapse," Noke asserted.

Noke said that Rio Tinto had thus far invested about US$10
million per year for exploration and would maintain a similar
level of investment in the future.

Rio Tinto is the world's largest mining company with a market
capitalization of $16 billion and operations in 40 countries. The
company started exploration in Indonesia in the 1970s, and
production began in the 1990s.

The company has a 50 percent stake in the country's largest
coal mining company, PT Kaltim Prima Coal, based in Sangatta,
East Kalimantan, in a partnership with British Petroleum, which
holds the remaining 50 percent stake. The company currently
produces 15 million tons of coal per year.

Rio Tinto also has a 90 percent stake in the country's largest
gold mining company, PT Kelian Equatorial Mining, based in Kelian
Long Iram, Kutai, East Kalimantan, in a partnership with PT
Harita Jayaraya. The gold mining company currently produces 14
tons of gold per year.

Rio Tinto also has a 13 percent stake in the U.S. mining
company Freeport McMoRan Copper & Gold, which is developing one
of the world's largest copper and gold reserves in the Grasberg
area of Irian Jaya.

In addition, the company holds a 40 percent stake in the Block
A, Block B and Western Mining contract areas in Irian Jaya, in a
partnership with PT Freeport Indonesia, which hold the remaining
shares.

PT Rio Tinto explorations, which oversees the company's
explorations in South East Asia, currently supervises eight
subsidiaries exploring mineral and coal deposits across the
country, including PT Rikit Alas Minerals in Aceh, PT Danum
Kelian Minerals in East Kalimantan, PT Mitra Sumbawa Minerals in
Sumbawa, PT Citra Palu Minerals in Sulawesi, PT Danum Bukit
Minerals in East Kalimantan, PT Bukit Tiang Minerals in West
Kalimantan, PT Mandar Uli Minerals in Sulawesi and PT Batubara
Mesuji in South Sumatra.

Rio Tinto set up the Rio Tinto foundation in 1995 to increase
the welfare of the communities living around its mining areas and
to promote the teaching of mining at the country's universities.
(jsk)