Indo Mines concludes land negotiations for pig iron project

By Puspita Maylana Devi

ASX-listed Indo Mines Limited said that its 70 percent owned Indonesian subsidiary, PT Jogja Magasa Iron (JMI), has successfully concluded negotiations to acquire land at the western end of the Contract of Work (COW) area in Yogyakarta.

?The acquisition of this core block of land is a key milestone in implementing the pig iron project and establishes the location of the permanent iron making plant and associated infrastructure,? the company said in a statement received Tuesday.

The land is located within Paku Alam Ground (PAG). JMI has reached agreement with Pakualaman Sultanate to have access to l40ha of PAG and pay compensation to local farmers working on the land to secure rights for its use.

At this stage, agreements have been reached with farmers operating approximately l00ha of the PAG. JMI has agreed to pay each farmer Rp750 million per ha (or approximately US$65,000 per ha, at the exchange rate of US$1 = Rpl 1,500). It is expected that arrangements for the remaining 40ha will be concluded on the same basis, resulting in total payments of approximately US$9.2 million to be paid over the course of the next three months to secure rights over the entire l40ha area. Local farmers will be given the opportunity to harvest any .crops that remain unharvested at the time that land rights are transferred.

The farmers can utilize the compensation received to start up small private businesses, such as catering and laundry to accommodate the people working in the area. The supply of construction materials and office supplies can also be done through Local Farmers Cooperatives.

Inclusive of the port, power station, roads and construction lay down areas, JMI has estimated that a total of 225ha of land is required for the total construction area. It will therefore progressively seek to acquire the remaining 85ha over time as discussions progress.

JMI is in the process of finalising the amendment to the Feasibility Study for resubmission to the Indonesian government which provides for the pig iron plant to be located at the western end of the COW area. It is expected that this will be submitted by the end of September. Acquisition of the land and approval of the revised Feasibility Study, paves the way for JMI to conduct ground breaking within the COW area.

Editing by Reiner Simanjuntak