Sumbawa Island to get US$400m investment

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)