Sumbawa Island to get US$400m investment

JAKARTA (JP): PT Newmont Nusa Tenggara will invest up to US$400 million to develop infrastructure around its Batu Hijau copper and gold mines on Sumbawa Island, east of Bali, a company executive said yesterday.

"The infrastructure, including a 160 megawatt power plant worth about $190 million and a port facility worth $55 million in Benete Bay, are scheduled to be built in March," Newmont Nusa Tenggara president Eric Hamer said.

Newmont will also build a township for thousands of employees, schools for native and expatriate children, roads and water and communication systems, he said.

All facilities are expected to be ready before Bukit Hijau starts production in November 1999, he said.

"The total investment in the Batu Hijau copper and gold mining projects is estimated at $1.9 billion," he said.

The mines will be developed in an area of 27,000 hectares.

The projects are owned by a joint venture company, which is 45 percent owned by America's Newmont Nusa Tenggara, 35 percent by Japan's Sumitomo Corporation and 20 percent by Indonesia's Pukuafu Indah.

"Batu Hijau mining, discovered in 1990 by Newmont, contains an estimated 11.7 billion pounds of copper and 13.4 million ounces of gold which are sufficient to support 20 years of production," Hamer said.

He said the copper grade was 0.52 percent and the gold grade 0.013 ounces a ton.

He said an environmental impact analysis for the project had been approved by the Environmental Control Agency, but Newmont was still waiting for a final approval from the Ministry of Mines and Energy to begin production.

The projects will employ 5,500 people in construction and 2,300 in production, 90 percent of them will be Indonesian, he said.

The copper project in Sumbawa will be the second in Indonesia after the Freeport mine in Irian Jaya, which started production in 1973.

Batu Hijau will be an open pit operation with an estimated daily average mining rate of 500,000 tons and milling rate of 120,000 tons, with a potential of 160,000 tons a day in its seventh year of operation.

Hamer said the project was expected to produce 245,000 tons of copper, 513,000 ounces of gold and 970,000 ounces of silver a year in concentrates.

"Bukit Hijau is projected to meet a break-even point between seven to nine years of operation," he said.

Bukit Hijau will use salt water flotation for gold recovery and subsea tailings disposal, he said.

Hamer said PT Newmont Nusa Tenggara, a subsidiary of the Colorado-based Newmont Gold Company (NGC), signed a 30-year contract of work in 1986 for a 197,000 hectare concession on the islands of Sumbawa and Lombok.

NGC has been operating a gold mine in Minahasa, North Sulawesi, since last March through its subsidiary, Newmont Minahasa Raya, with an annual capacity of 140,000 ounces of gold bullion. (04)