New investment in the mining sector is
likely to grow at a slow pace this year as
investors wait for the enactment of a new
mining bill being deliberated at the House
of Representatives. The Energy and
Mineral Resources Ministry’s director general
of coal, mineral and geothermal Simon
Sembiring said during February investment
was estimated to grow by 2.5% this year,
to $1.38 billion from $1.35 billion.
Investments expected for this year included
a project by mining firm PT Dairy Prima
Mineral and Herald Resources of Australia,
which would cost a total of $180 million,
he said. The project has been stalled for
some time because of permit problems.
The ministry has refused to allow the company
to operate in a protected forest area
where its mining concession is located.
With the recent issue of a new governmental
regulation on forest use, however, Dairy
would have a chance to realize its investment,
Simon said. The new regulation
allows mining firms to operate in protected
forest areas in exchange for financial compensation
for future forest rehabilitation.
Compensation costs are calculated at Rp 3
million (some $331) per hectare per year.
Sembiring said Dairy’s project was slated
to start this year. He said in general
most mining companies remained hesitant
about starting new operations in Indonesia
because of several legal hurdles in the new
mining bill. He said the hurdles included
potential legal uncertainty for mining firms
in the future.
The new law was expected to lure more
investment into the mining sector but
stumbling blocks in the deliberation of the
bill included a so-called transition period.
Mining companies with government contracts
will have a wait period before they
can comply their operations with the
planned new permit system under the new
law. The government and lawmakers are at
odds over the length of the transition period.
Lawmakers want companies to immediately
comply with the new law within certain
period of time. The government, however,
said companies with already-secured
permits should not have to comply with the
new law until their permit expires.
As featured in Womp 08 Vol 3 - www.womp-int.com