Aurora warns on Indonesia mining investment future

Indonesia would struggle to attract foreign investment for mining development unless its political situation improved, the chairman of Australian mining firm Aurora Gold Ltd warned here Wednesday.

"Without a reasonable measure of political stability and without law and order, there is unlikely to be future investment in mining in Indonesia," chairman Rory Argyle told shareholders at the company's annual meeting.

Aurora operates the Mount Muro gold operation in Indonesia. In recent years the operation has been subject to illegal mining, pit invasions and denial of access to operating and exploration areas.

Argyle said he saw little chance of improvement in Indonesia in the short to medium term.

Regionalization policies being pursued by Jakarta were fundamentally flawed and had been poorly implemented, he said.

"Despite this being obvious to all participants, there seems, at least for the time being, little chance of improvement in the situation while the current leadership vacuum exists and the prevalent social and political forces in the country continue to tear it apart rather than unify it," he said.

Indonesia's regional autonomy laws, which came into force on January 1, delegated supervision of mining activities to district government.

However Argyle said there was no financial advantage for Aurora.

"We are committed to recovering that investment to the extent possible, including the location of additional reserves within the contracted work area," he said.

"However, the safety of our people is paramount and we continue to monitor working conditions very closely."

He said Aurora had aborted proposed development of its Toka Tindung project in North Sulawesi after rampant illegal mining in 2000. (*)