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Thursday, 18 February 10
INDONESIA ZONING RULE THREATENS MINING - INDUSTRY


Reuters reported that, confusion over a new Indonesian land use regulation could halt the operations of some mining firms, providing a new threat to billions of dollars of proposed new investment in the sector, an industry official said on Wednesday.

The public works ministry has issued a new regulation attached to the 2007 spatial planning law to provide guidelines on zoning of areas used for different purpose such as conservation, housing and industry.

Companies which have set up in areas not intended for a particular business can have their business permit revoked under the law.

The regulation has discouraged the forestry ministry from issuing land-use permits and extending permits for mining firms because officials were worried about being penalised for awarding improper permits, Priyo Pribadi Soemarno, executive director of the Indonesia Mining Association, said.

"The spatial planning does not include mining potential," Soemarno said.

"There will be more companies forced to stop operations because their mining areas are declared as conservation areas," he added.

In a few cases, some areas have been declared as conservation areas even though they already have existing mining projects, Soemarno said.

"There will be more companies forced to stop operations because their mining areas are declared as conservation areas"
 

An Indonesian unit of Thailand's top coal miner Banpu PCL BANP.BK last week had to stop operations at its Jorong coal mine in Kalimantan in Indonesia's Borneo island due to a land permiting problem.

The energy ministry said the Jorong mine operated PT Indo Tambangraya Megah Tbk (ITMG.JK) had already put in a request to the forestry ministry to extend its permit, but one had not yet been issued.

Soemarno did not detail mining companies that could find their operations halted due to conflicting land permits, saying the association was still compiling a list.

But the regulation could also mean new mining projects which are currently at the exploration stage may be unable to advance into the production stage in some cases, Soemarno said.

The association identifed a number of new mining projects currently in progress, worth a total of $10 billion, including a nickel project by Eramet, a nickel project by global miner Rio Tinto and an alumina smelter project by state miner PT Aneka Tambang Tbk

The problems over land permits could hit mining output by increasing uncertainty in the investment climate in Indonesia, mining officials have said.

Southeast Asia's largest economy has struggled to lure foreign investment into mining in recent years, compounded by some politicians taking a nationalist line on resource exploitation and also because of uncertainty over regulations tied to a new mining law passed in 2008.

The government has said it expected mining investment to hit $2.5 billion next year, up from $1.81 billion in 2009.
Source: Reuters



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