Dealing with local mining conflicts, the central govt must be honest: Noke

Rio Tinto Indonesia president Noke Kiroyan has called on the central government become a "fair referee" in settling conflicts between mining companies and local people or local administration.

He noted that the Autonomy Law stipulated that 80 percent of mining royalties should go to local administrations. And multinational mining companies would abide by the rules. Nevertheless, conflicts with local administrations may arise in the future with the implementation of regional autonomy.

To prevent acute conflicts, the government and local administrations should work together to improve mining contracts of works.

"The contracts of works need to be amended, and the result (of the amendment) must be signed by the companies and also the government," he said.

Meanwhile, mining expert from PricewaterhouseCoopers (PwC), Bob Parsons, said Indonesia had a competitive advantage in the mining sector. Nevertheless, the growth of mining industries in Indonesia had been slowing down because of investors' weakening confidence in Indonesia, especially because of increasing political risks.

"I doubt it if investment would return to an acceptable level, until the mining law is improved and issues on regional autonomy are tackled," he said.

PwC's survey against 17 producing mining companies and 19 mining companies in their exploration stage showed that in the mining industry in Indonesia produced an annual average returns of 13 percent in the period of 1995 to 1999.

Parsons noted that good mining companies would re-invest 70 percent of their profits in the mining sector and use the 30 percent to pay dividends to shareholders. (*)