13 mining sites get forest status changed
13 mining sites get forest status changed
November 06, 2003
Despite reports in the Indonesian media to the contrary recently, the Coordinating Ministry for Economics confirmed in Jakarta Wednesday (November 5) that the government will soon issue a presidential decree (Kepres) changing the status of forest lands in 13 contracts of works from protected to non-protected forest to allow mining development and production activities to resume.
Nearly 5 years after the implementation of Forestry Law No 41/1999 that banned open cut mining operations on land classified as protected forest.
Reports in the Kompas daily Wednesday indicate the government decided to allow 13 of the 22 to proceed after legal advice that it could be sued for up to US$31 billion for its decision to allow the Forestry Law in 1999 to effectively and retrospectively extinguish approved Contracts of Work hedl by foreign companies to develop and mine mineral and coal resources.
Last year the Ministry of Energy and Mineral Resources proposed that 22 mining companies be allowed to resume their operations. The 13 mining companies awarded business permits by a limited coordination meeting have determined a viable mineral resource within their contracts of work (COW).
This decision will be discussed in cabinet meeting headed by President Megawati Soekarnoputri planned for Thursday (November 6). “The plan was this meeting held on Thursday. This decision will be delivered once more to the House of Representative (DPR). Soon after the DPR approval, the decree will be issued,” said a member of the Department Energy and Mineral Resources legal team in Jakarta on Tuesday (November 4) as quoted from Bisnis Indonesia daily.
Actually all technical ministers, Minister of Energy and Mineral Resource, Minister of Internal Affairs, Minister for the Accelerated Development of East Indonesia, and the Minister of Environment, along with the coordinating Minister for Economics have agreed to the proposal for 22 mining companies to be granted permits to resume activities.
There was an objection from a key institution, the Department of Forestry, because the 22 companies kept changing their name reflecting new partnerships and investors over the recent years.
Meanwhile, Bisnis Indonesia reported that the Minister for Coordination of the Economy, Dorodjatun Kuntjoro-Jakti is scheduled to report to President Megawati Thursday regarding the decision on the issue of overlapping regulations concerning the use of protected forestlands. Only 115,118 hectares from a total 6,054,175 hectares of protected forest surrounding the mining areas will undergo a change of status.
A copy of the official decision of the Limited Coordination Meeting obtained by Bisnis Indonesia confirmed the approval of 22 mining companies, (13 were approved and 9 are continued) selected to continue their activities within protected forest zones and outlined the procedure to ratify the decision. The meeting also agreed to the mechanism and process of resolving the overlapping regulations as first proposed in a meeting on 18 July 2003.
The agreement will be delivered to the President through the Minister for Coordination of Economics to obtain an instruction for approval from the parliamentary House of Representative (DPR) Commission VIII and III before the Presidential Decree is issued.
An integrated inter-departmental team established to study the submissions by mining companies and the DEMR to resume operations delivered its report, and the criteria used for selection of mining companies recommended for approval.
Mining companies must meet the following criteria if their applications to resume operations and change the status of forestland use within their COWs are:
+The company has conducted exploration programs
+The company has delineated an economic mineral (or coal) resource and defined the plant or processing area required
+The company must have determined the investment or capital cost of the operation
+The company must contribute and provide benefits to local communities and regional development
+The company must have the support of the regional government.
The limited coordination meeting decision was that the 13 companies prioritized for approval are: PT Freeport Indonesia, PT Karimun Granit, PT Inco Tbk, PT Indominco Mandiri, PT Antam Tbk (Buli-Malut), PT Natarang Mining, PT Nusa Halmahera Minerals, PT Pelsart Tambang Kencana, PT Interex Sacra Raya, PT Weda Bay Nickel, PT Gag Nikel, PT Sorikmas Mining, and PT Antam Tbk (Bh Bulu Sultra).
The other nine companies considered to have good potential to continue their activities are: PT Newmont Nusa Tenggara, PT Sungai Kencana, PT Irja Eastern Mining, PT Kalimantan Surya Kencana, PT Nabire Bakti Mining, PT Dairi Prima Mineral, PT Newmont Horas Nauli, PT Maruwai Coal, and PT Sumbawa Timur Mining.****
Herald Resources Ltd., of Australia, announced the discovery of significant lead and zinc resources in the Dairi area, Bukit Barisan Highland; the exploration concentrated in the Anjing Hitam area, in the southeastern part of the Sopokomil/Bongkaras domal structure, and it was estimated that the deposit contained an indicated resource of 7.5 million tons of lead and zinc at 10.3% lead, 16.7% zinc, and 14 grams per ton of silver and an inferred resource of 2.5 million tons at 6.8% lead and 11.3% zinc. Despite some reserves, no manganese was mined in 1999 and 2000.
Concerns about political uncertainties continued to deter foreign investment, creating an inhospitable environment for investment and operations. Expansion plans were on hold until the economic climate improved. In 1999, the Indonesian parliament passed two laws, to be implemented in 2001—on regional political autonomy and fiscal decentralization—whose impact on investment rules and procedures remained unclear. Mining companies were confused about the connection between the two laws on general mining. The major problem was contradictions between the centralistic 1967 law on mining, and the decentralistic law of 1999. In 2001, the 1967 law would no longer have legal strength to protect mining operations, particularly on new investments. Also, another 1999 law, on forestry, prohibited open-cast mining, which would protect forests in 68% of the area of Irian Jaya potentially available for mining exploration; 58%, in Sumatra; 50%, in Maluku; and 39%, in Sulawesi. Many mining companies postponed their expansion and new investment projects until the government could provide legal protection that was clear and unequivocal. In 2000, mining companies that operated under contracts of work (COWs) spent $550 million, which was half the amount expended in 1999. In 2000, 30 mining contactors, 14 producing, and 16 exploration companies postponed their investment programs, and 18 COWs were terminated. MEMR and related departments drafted a new mining law/regulation to replace the 1967 law with an updated regulatory framework that recognized the changing role of government, especially with regard to implementation of regional autonomy and fiscal decentralization and further safeguard of the natural environment.
Indonesia’s constitution places all natural resources in the soil and waters under the jurisdiction of the state. In 1999, the government increased taxes and royalties that created a less competitive investment environment. Restructuring and privatization of state-owned industries has been very slow, and new investment was still low. As the world’s fourth most populous country, Indonesia could become one of the largest steel-consuming countries. However, its volatile political situation and uncertain economic climate hampered development. The state-owned general mining company, PT Aneka Tambang, has gone public on the Jakarta Stock Exchange.
The following table indicates zinc projects that are currently in development, as well as mines that are expected to be restarted in the near future:
|New Mines||Start Production||Zinc
|Lanping, China||Late 2005??||140,000|
|Dairi, Indonesia||Late 2006/07||90,000||50,000||US$118M||Brook Hunt Nov 2005|
|Jaguar, Australia||Early 2007||25,000||Brook Hunt Nov 2005|
|Duck Pond, NFLD Canada||Late 2006||34,500||Macquarie|
|San Cristobal, Bolivia||Early 2007?||182,500||85,000||US600M||Apex silver|
|Duddar, Pakistan||Late 2007||100,000||Macquarie|
|Cerro Lindo, Peru||Mid 2007||140,000||20,000||Brook Hunt Nov 2005|
|Perkoa, Burkina Faso||Late 2007||60,000||$US72.5||Mining News, Dec 2005|
|Wolverine, Canada||Q3 2007||44,000||4,000|
|Aljustrel, Portugal||2007?||78,000||18,000||Brook Hunt Nov 2005|
|Subtotal 2006 and 2007||754,000||177,000|
|Mehdiabad, Iran||2010||450,000||110,000||Brook Hunt Nov 2005|
|Penasequito, Mexico||Mid 2008||75,000||40,000||Brook Hunt Nov 2005|
|Khandiza,Uzbekistan||2008?||45,000||17,000||Brook Hunt Nov 2005|
|Expansions, Restarts, Reductions|
|Endeavor, AustraliaCBH Resources||Mine failure Oct 2005 and restart||85,000?||52,000?||Brook Hunt Nov 2005|
|Balmat, USA||Mid 2006||35 mths to ramp up to 54,000||$20M||Brook Hunt Nov 2005|
|Lennard Shelf, Australia||18 mths after restart decision||180,000||TeckCominco Jan 2006|
|Sa Dena Hess, Canada||9 to 24 mths after a decision||40,000||TeckCominco Jan 2006|
|Antamina, Peru||Est.120,000 vs
184,000 in 2005
|TeckCominco Jan 2006|
|Langlois, Canada||Mid 2007||54,000||Brook Hunt Nov 2005|
|Black Mountain-Deeps expansion, Namibia||2005||Increase from 28,200 to 45,000|
Antam Battles Bumi for Control of Zinc, Lead Mine (Update5)
By Naila Firdausi and Madelene Pearson
Jan. 30 (Bloomberg) — PT Aneka Tambang and a Chinese partner offered A$505 million ($449 million) in cash for Herald Resources Ltd., topping a bid by Indonesia’s largest mining company to gain control of a lead and zinc project.
Antam, as the nickel mining company is known, and zinc producer Shenzhen Zhongjin Lingnan Nonfemet Co. offered A$2.50 a share, Perth-based Herald said in a statement. The stock closed above the price, signaling some investors expect a higher proposal. PT Bumi Resources had bid A$2.25.
Herald waited two years for approval for the $192 million Dairi mine. A joint bid by Antam, majority-owned by Indonesia’s government, and Zhongjin Lingnan may ensure the project goes ahead to meet rising metals demand from China.
“It would be easier for Antam to get all the necessary licenses than Bumi, considering” it’s owned by the government, Freddy Hendradjaja, who helps manage $581 million at PT Danareksa Investment Management including Antam stock, said in Jakarta. “Chinese companies are trying to find sources in other countries as demand grows and supply is strapped.”
Herald rose 8 cents, or 3.2 percent, to A$2.58 on the Australian Stock Exchange at the 4:10 p.m. Sydney time close. Antam shares jumped 11 percent to close at 3,600 rupiah in Jakarta. Bumi, also the country’s largest coal producer, fell 3 percent to 6,400 rupiah.
Antam is Indonesia’s second-largest nickel mining company by market value, and Zhongjin Lingnan is China’s fourth-biggest zinc producer.
Herald’s board unanimously recommends the joint bid in the absence of a higher offer, the company said in the statement to the Australian exchange.
Jakarta-based Antam wants to reduce its reliance on nickel, which contributed 88 percent of sales in the nine months to Sept. 30. The company last year signed a $1.5 billion accord with United Co. Rusal, the world’s biggest aluminum producer, to build an alumina plant, and has said it wants to buy gold mines.
Bumi made its hostile offer last month after talks with Herald over a six-month period faltered. A successful bid would be the second-largest Indonesian takeover of a foreign company.
“We are watching and waiting for full details,” said Dileep Srivastava, head of investor relations at Bumi. “We continue to retain our interest in Herald and are happy to hold about 20 percent at a discounted price.”
China is the world’s largest consumer of zinc, used to galvanize steel, and lead, used in car batteries. Lead has climbed 65 percent in the past 12 months in London as consumption outstrips production, while zinc has dropped 30 percent because of increasing global stockpiles.
“This is the first time Zhongjin Lingnan has looked to expand overseas,” said Ren Yunhe, a Shanghai-based analyst at Shenyin Wanguo Securities Co. “The acquisition target looks attractive according to the reserve prospects provided in the statement.”
Dairi, located in North Sumatra, is forecast to produce 220,000 metric tons of zinc concentrate and 100,000 tons of lead concentrate a year.
Antam, which owns 20 percent of Dairi, and Zhongjin Lingnan will fund the offer through cash and debt, the statement said. The bid is subject to a number of conditions and includes a break-fee of A$5 million payable to Antam and Zhongjin Lingnan.
Euroz Securities Ltd. is the financial adviser to Herald and Blakiston & Crabb is acting as legal adviser. Antam and Zhongjin are being advised by Macquarie Capital Advisers, while Blake Dawson is acting as their Australian legal adviser.
Last Updated: January 30, 2008 05:10 EST
More from Dairi …(International Annax Ventures’ zinc-lead mine)(Brief Article)
International Annax Ventures Inc. has received further assay results from its continuing drilling programme at the Sopokomil zinc-lead property in northern Sumatra, Indonesia. The drilling targeted the Anjing Hitam prospect (43D) and the Bongkaras area (45D), with the following results:
Hole IntervalZn Pb (m) (%) (%) 43D 381.5-390.3 13.2 7.7 45D 99.0-104.5 14.5 8.5Anjing Hitam is a stratiform …
Bumi Resources, the biggest coal producer in Indonesia, offered 455 million Australian dollars, or $397 million, for Herald Resources, and will seek to end a two-year deadlock over the company’s planned zinc and lead mine in Sumatra.
Bumi will pay 2.25 dollars a share for Herald, Bumi said in a statement Tuesday. Bumi made the hostile offer after talks with Herald faltered, a Bumi director, Kenneth Farrell, said Wednesday.
Indonesia is seeking to keep more of its resources in local hands after prices for commodities including oil, zinc and copper soared in the past five years. A successful bid would be the second-largest Indonesian takeover of a foreign company. Herald has been waiting for government approval of the $192 million Dairi zinc and lead underground mine for two years.
Dairi “is one of the world’s best undeveloped zinc deposits,” Peter Arden, an analyst at Ord Minnett in Melbourne, said. “It would be a really big prize for a local group.”
The biggest Indonesian foreign acquisition came in October when Berlian Laju Tanker, the largest shipping company in the nation by market value, agreed to pay $850 million to buy Chembulk Tankers, based in the Marshall Islands.
Bumi, whose shares have surged almost sevenfold this year to make it the second-biggest company in Indonesia by market value, is also seeking to expand its coal production, gold, copper and iron ore businesses.
“Bumi’s experience in the Indonesian mining sector and the requirements of the Indonesian regulatory process make it uniquely positioned to advance” the Dairi project, Bumi’s chairman, Ari Hudaya, said in the statement.
Newmont Mining, the second-biggest gold producer in the world, and Sumitomo Metal Mining are being forced to cut their combined 80 percent stake in the $4.65 billion Batu Hijau gold mine in Indonesia.
Australian zinc and lead producer Perilya bought an 8.9 percent stake in Herald last month and may seek to accumulate a strategic stake, Macquarie said in a Nov. 20 report.
Perilya’s chief executive officer, Len Jubber, could not be reached for comment.
It is unlikely a rival offer from Perilya or others would be forthcoming given it i’s an Indonesian asset and the other bidder is “the largest Indonesian mining company,” Farrell said.
“We did note the Perilya position, we haven’t spoken to them and at this point in time we perceive them as a shareholder of significance,” Farrell said. “But only a shareholder of significance, nothing more than that.”
Dairi, 20 percent owned by Aneka Tambang, is scheduled to produce 220,000 metric tons of zinc concentrate and 100,000 tons of lead concentrate a year. Construction costs may rise 15 percent from the initial $192 million estimate because of plant design changes and delays in obtaining approvals, Herald said last month.
“Bumi anticipates there will be a need for significant additional capital before first production,” Farrell said. “We are prepared to make that investment.”
The offer is conditional upon the construction cost of the mine not rising above $230 million, Bumi said in the statement. Bumi will go ahead with the acquisition if it receives acceptances of at least 50.1 percent, gains the approval of the Foreign Investment Review Board in Australia and as long as the price of zinc does not fall below $2,000 a ton for three or more consecutive days of trading.
“It should have been in production three or four years ago,” Ord Minnett’s Arden said. “Where they were going wrong is that they just didn’t have enough local horsepower.”
Zinc for three-month delivery fell $30 to $2,400 on the London Metal Exchange as of 1:37 p.m. Sydney time. The metal, which has declined 45 percent in the past year, last traded below $2,000 for three consecutive days in January 2006.
Credit Suisse is providing financial advice to Bumi for the offer and Mallesons Stephen Jacques is Bumi’s Australian legal adviser.
Herald’s executive director, Michael Wright, could not be reached for comment.
Aneka Tambang’s corporate secretary, Bimo Budi Satriyo, also could not be reached