New investment in mining sector drops by 64 percent: Survey

The mining sector continued to give a significant contribution to the country?s economy and social activities last year despite the significant drop in new investment in the sector, according to a survey made PriceWaterhouseCoopers in cooperation with Indonesia Mining Association (IMA), Neraca reported on Wednesday.

PwC?s mining specialist Marc Upcrosft said the survey indicated that there was 64 percent drop in the spending of mining companies for new mining projects and for the expansion of the existing mining capacities last year as compared the average annual level booked during the past five years.

He attributed the drop in new investment to the continued uncertainties in the country?s macro investment climate. "Investment will increase if the certainty in the long-term investment climate is restored," he said. "The low successful rate and the long period of time needed from the stage of exploration to production activities indicate that there will be no significant progress in Indonesia?s mining activities in the next few years," he added.

According to PwC?s survey, mining companies? total spending for new projects, expansion activities and procurement of new capital goods totaled about US$228.5 million last year or only about 15 percent of the average level of about $1,500 million during the period between 1996 and 1999.

The survey also indicated that the state revenues, both in the form of royalties and taxes, from the mining sector reached about $813 million or Rp 8 trillion in 2001. "Mining companies generally paid taxes higher than other industries. The combined tax and royalty rates of the mining companies 60.1 percent in 2001," Upcrosft said. (*)