Jogja Magasa Iron signs iron sand CoW

The government on Tuesday granted a Contract of Work (CoW) to PT. Jogja Magasa Iron (JMI), which will enable the miner to develop its iron sand project in Kulon Progo, Jogjakarta.

The 7th+ generation CoW is the first granted since 1998.

Australian mining firm has 70 percent shares at JMI with the remaining balance held by local partner PT. Jogja Magasa Mining.

The CoW covers an area of around 3,000 hectares.

Under the CoW JMI could conduct pre-production activities for maximum period of 11 years and 30 years of production.

Director General of Mineral, Coal and Geothermal at the Ministry of Energy and mineral Resources Bambang Setiawan said that JMI will be subjected to prevailing tax regime as opposed to nail-down regime usually given to CoWs.

The company is also obliged to list its shares in Indonesian Stock Exchange between 3-5 years after production commences.

The company is also obliged to set aside 1.5% of annual sales in the first ten years of operations for community development, increasing to 2% after 11th year.

The company is planning to build a pig iron complex within the concession, using irond sand as feed. The company said it would spend US$600 million for the project with initial output of 1MTPA of pig iron in 2011. The investment would include plant, road and railway, port facilities and a 350-MW coal-fired power plant.

Pig iron produced would be sold to steel maker PT. Krakatau Steel, local customers in the surrounding areas and to export market. (godang)