Minerals exploration difficulties will hold back Indonesian economy – new mining group warns

By Geoffrey Gold

“Indonesia is facing a future drop in export earnings from minerals and increased costs from importing industrial minerals if its exploration sector remains in difficulty,” Mr Malcolm Baillie, a three-decade pioneer in international best-practices in minerals exploration in Indonesia, said today.

Mr Baillie is Chairman of the Forum for Exploration and Mining Development Indonesia / Forum Explorasi Pertambangan Indonesia (FEMDI / FEPI), a new mining sector organization of explorers, medium-size producers and service companies.

“Increased demand for mineral products, particularly from China and India, has resulted in soaring metal prices and placed pressure on existing mining operations to meet the demand. The inevitable result of this is the depletion of known reserves. Major new mines are not being discovered.

“Exploration, the only way to identify new reserves, is a high risk business traditionally undertaken by the junior exploration and development companies,” he explained.

“Indonesia is ranked as one of the countries with the highest potential for new mineral discoveries, and has attracted its fair share of investors. Interest was heightened last year with the introduction of the new Mining Law and some of the implementing regulations.

“However, the initial enthusiasm of these investors is wavering due to the complex and lengthy administrative procedures which also encourage unacceptable practices,” he advised.

“FEMDI-FEPI was born out of these frustrations and concerns. It is our positive desire to assist the Government of Indonesia to clarify and streamline the procedures needed to encourage more risk capital to the sector. New discoveries of hard-to-find minerals are critical for Indonesia’s economic growth and the well-being of its people,” he said.

“While exploration investment in Indonesia has only averaged US$20 million a year over the past decade, in just one year, 2008, US$470 million was spend in Brazil and US$3.3 billion in Canada. Studies show that spending of at least US$500 million annually is needed just to sustain Indonesia’s current production levels.

“There are several other associations representing the mining sector which are also concerned to see the industry reach its full potential, but FEMDI differs from these in that its sole focus is on the issues preventing badly needed exploration from proceeding at a level required to maintain Indonesia’s position in the world mining community,” he said.

“We call on all stakeholders, including the companies involved, the associations representing them and the Government of Indonesia, to address this worsening situation with a sense of urgency,” he concluded.

Vice Chairmen of FEMDI-FEPI are Mr Sukmandaru Prihatmoko (AGC Indonesia) and Mr Steven Hughes (Tigers Realm Minerals).

Contact: Plaza 3, Blok E-10, 2/Fl, Pondok Indah, Jl TB Simatupang, Jakarta 12310, Indonesia. http://www.femdi-fepi.com/


Sanjay Singh said…
Main reason for the same are:
1. IUP allotted to company having no solid mining & finance Background and they used IUP as trading business.
2. Poor infrastrucre all around the Kalimantan and Sumatra having richest mineral deposit.
3. Regulation related with land use, Forest, Mining area are not cleared..Government looks planning only for getting money from Royalty and now adding the KPPL area into HP area..!!
4. Many of the owner stopping their KP/IUP as have shortage of fund and long process of Permission from IUP exploration to Exploitation..AMDAL, FS, Ijin Kuasan Hutan, Pinjam pakai Hutan...etc..
5. Solicitation and Coordination from land owner for exploration and Mining become difficult day by day as Raw Rubbers( Karet) rate came up to Rp 18000 per Kg in Kalimantan and Karet & Palm tree becoming main business of the villagers..!!