Legal uncertainty hits mining sector

Minister of mineral resources and energy Purnomo Yusgiantoro acknowledged Wednesday that a number of mining companies had suspended their exploration activities due to uncertainty over the draft of the new mining law.

"We have letter from some mining companies, both local and foreign, including Newmont, saying that they are suspending their activities between one to two years, awaiting development over the legal aspects," Purnomo said.

"But the companies which are already producing will continue to operate. The firms are suspending their operations that are in the exploration stage," he added.

PT Newmont Pacific Nusantara announced earlier that it was suspending its Greenfield operation in Indonesia due to the lack of clear legal framework particularly with the new draft of the mining law which the company said was not bankable.

Mining companies have also been troubled with the new regional autonomy law, introduced early this year, which give greater power to provinces and districts in managing their own economic affairs including mining activity.

Purnomo said that the government would continue to improve the draft of the new mining law.

Purnomo admitted, however, that the suspension of the Greenfield operation could cause bad impact to the country's overall mining sector and economy. (*)