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Moratorium may hurt new projects: Mining group

The government’s proposed two-year moratorium on issuing new concessions to convert forests and peatlands to other uses may hinder new mining projects, a business association says

Alfian (The Jakarta Post)
Jakarta
Thu, August 5, 2010

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Moratorium may hurt new projects: Mining group

T

he government’s proposed two-year moratorium on issuing new concessions to convert forests and peatlands to other uses may hinder new mining projects, a business association says.

“The development of new mining projects might be delayed due to the moratorium. Mining projects such as BHP’s project in Maruwai could be affected,” Supriatna Suhala, executive director of the Indonesian Coal Mining Association (ICMA), told reporters Wednesday.

BHP Billiton, the world’s largest mining company, and local partner PT Adaro Energy are developing the Maruwai coal project in East and Central Kalimantan and waiting for forest land-use permits from the government. BHP said their concession held 774 million tons of undeveloped metallurgical and thermal coal.

Supriatna added that the moratorium might also affect the existing companies who need to expand their concessions. “There are some companies whose forest land-use permits will expire within two years. They may have to stop operating,” he added.

The moratorium was still under discussion and the association had submitted their views to the Forestry Ministry, Supriatna added.

In late May, the government signed an agreement with Norway to implement a two-year moratorium on forest conversions to reduce carbon emissions.

In exchange, Indonesia will receive a US$1 billion grant to reduce deforestation.

The government is preparing a presidential decree to implement the agreement.

Indonesia Mining Association (IMA) executive director Priyo Pribadi Soemarno said he was more concerned about the draft presidential decree draft than the agreement with Norway .

“The agreement only says the moratorium is aimed at reducing emission by halting forest use permits for natural forests and peat forests. We fully support this as most mining operations in Indonesia are outside natural forests and peatlands,” Priyo said.

He added that the draft raised more concerns as there was an article stating that the government would review previously-granted concessions.

“This reflects an effort to withdraw what has been given and this will have a bad effect on investment,” Priyo said.

Even without the moratorium, many mining projects, such as the $500 million zinc and black tin project by Dairy Prima and the Elang copper project by PT Newmont Nusa Tenggara, have been in limbo for years due to permit problems,
he said.

Both projects are stuck because the permits have not been granted yet by the government.

Priyo said that eight projects were in a similar situation.

“Around $14 billion in potential investment in these projects have been delayed due to this problem,” he said.

Masnellyarti Hilman, a deputy minister for nature conservation enhancement and environmental degradation control at the Environment Ministry said that the conflict between mining activities and environmental issues have always been one sided.

“We always talk about the mining sector contribution to the state budget, but we never discuss on how much the government has to spend for disasters caused by environmental damage,” she said.

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