BRMS may halt zinc exploration activities

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Publicly listed PT Bumi Resources Minerals (BRMS) may halt its zinc exploration activities in the company’s zinc concession area in North Sumatra because it is unlikely to be able to comply with the government’s new mining regulation.

The regulation, which prohibits the exportation of unprocessed metals starting from 2014, comes into effect at the same time as BRMS expects its subsidiary PT Dairi Prima Mineral to start production at its lead and zinc mining concession area in North Sumatra.

Under the regulation, miners must establish smelters or work in cooperation with other companies to process their mineral ores for export.

“We [the company] are studying the regulation, including the requirement to build a smelter. However, in estimating our production, it appears that would be uneconomic [building a smelter],” BRMS head of investor relations Herwin Hidayat said.

Herwin said that BRMS was open to the possibility of cooperating with foreign investors to build a smelter.

Dairi Prima, which is 80 percent owned by BRMS and 20 percent by state-owned miner PT Aneka Tambang, recently secured a forest-use permit for mining and exploiting at its zinc and lead concession. The permit is valid for eight years and can be extended.

According to Herwin, the company was expected to have an annual production capacity of 1 million tons of lead and zinc ore by 2014. BRMS has set aside US$200 million to develop Dairi Prima, particularly to build infrastructure and other supporting facilities in the mining area.

Indonesia Mining Association (IMA) executive director Syahrir Abubakar said that all stakeholders could find solutions and alternatives for mining companies that may not be ready to establish smelters by 2014.

“We need to consider how to provide the electricity and infrastructure, as well as map our ore reserves for the smelters,” Syahrir said.

He said that prior to the Mining Law’s implementation, all stakeholders gather to discuss the domestic mining industry’s demands. According to Syahrir, IMA has scheduled a meeting for all stakeholders, which include representatives from the Energy and Mineral Resources Ministry, the Trade Ministry, the Finance Ministry, manufacturing industry and mining companies, in the following months.

“If we all gather in one discussion then we could know what kind of mineral products our manufacturing industry needs, and the policy would therefore most benefit our domestic economy,” he told The Jakarta Post.

The meeting for all black-lead stakeholders, Syahrir said, would be held on Sept. 4 in Jakarta.

Dairi Prima has one of the highest grades of zinc deposits in the world and will be developed as an underground mining operation. Dairi Prima’s concession includes areas called Anjing Hitam, Lae Jahe and Base Camp. The company has an estimated 11 million tons and 25 million tons of ore reserves and resources, respectively.

The lead and zinc would have likely been directed to export markets, particularly China.