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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 on Thursday investment was
estimated to grow by 2.5 percent this year, to US$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.
Simon 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.
"That is why we hope to be able to enact the new law before the House
recess session in April," Simon said.
"That will be our priority for this year."
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.
Indonesia, the world's largest archipelago, is rich with various mining
resources including gold, copper, tin, coal, bauxite and nickel.
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