Sudjana awards 65 mining contracts

JAKARTA (JP): The minister of mines and energy, I.B. Sudjana, awarded 65 sixth generation contracts of work (COWs) yesterday to joint venture and foreign companies to explore for gold, nickel and diamonds in Indonesia.

"The signing of these contracts proves that foreign investor interest in our mineral resources remains great," Sudjana said.

Of the foreign contractors, 26 came from Canada, 22 from Australia, six from the United States, four from South Africa, two from the Netherlands and one each from Papua New Guinea and South Korea.

Sudjana said the government was negotiating the seventh generation of mining contracts which would have better terms for investors and Indonesia.

Sixty-one of the contractors, including Canada's Placer Dome Inc and Barrick Gold Corp will explore for gold, two for diamonds in South Kalimantan and two others for nickel in Maluku and Irian Jaya.

The contract areas are in 17 provinces. The areas are Aceh (six contracts), North Sumatra (two), West Sumatra (three), Jambi (one), Bengkulu (one), West Kalimantan (six), Central Kalimantan (nine), South Kalimantan (four), East Kalimantan (seven), North Sulawesi (three), Central Sulawesi (two), South Sulawesi (one), West Nusa Tenggara (two), East Nusa Tenggara (two), Maluku (two) and Irian Jaya (13).

Sudjana said three other contracts President Soeharto initially approved had not been signed yet because the contractors had yet to established companies under Indonesian law.

The deputy chairman of the government COW negotiating team, Nursaleh Adiwinata, said the sixth generation originally included 70 COWs.

"But President Soeharto has not approved the other two applications by the Canadian firm Bre-X Minerals for the two gold projects in Busang (Busang II and III) in East Kalimantan until the controversy over its gold find is settled," Nursaleh said.

Nursaleh said the 68 COWs the President approved consisted of 61 joint ventures between foreign and domestic private companies and Indonesian state-owned firms PT Aneka Tambang and PT Timah and seven wholly-owned foreign companies.

The contractors looked satisfied as some had waited for years for their COWs.

"I sent the applications in 1994. I understand in Indonesia it normally takes years to process applications like this," said Gary J. Atmont of the Canadian firm South Pacific Corp, which got seven contracts.

Nursaleh said a contractor under the sixth generation contract was required to spend between US$5 million and $40 million on exploration and operate in Indonesia for between four and seven years.

"Each of the contractors has to relinquish 75 percent of their contract areas after the completion of the exploration period," he said.

Nursaleh said the contractors had to pay land rents and property taxes before their starting any production.

The contractors have to pay a 30 percent income tax, down from 5 percent in the fifth generation COWs.

But land rents and property tax are higher than before.

Nursaleh said the new COWs required contractors to make employing locals a priority.

The signing ceremony was attended by the governors of the 17 provinces where the contractors will work.

"We invited the governors so the contractors get to know the chiefs of the provinces where they will work," Sudjana said. (jsk)

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