Investment in mining sector drops

Investment in the country's mining sector over the past two years has dropped by 70 percent each year, according to a mining expert.

Chairman of the Indonesian mining expert association Herman Afif Kusumo was quoted by the Bisnis Indonesia daily as saying that while exploration spending in 1997 totaled US$223.5 million, it dropped by more than 65 percent to $78.9 million in 1998.

"And it dropped by 72 percent in the following year," he told a business gathering.

Herman said that this was a concern because the future of the Indonesian mining sector over the next decade would depend on the current exploration activity.

He said that the mining reserves of Kelian, Newmont, Aurora Mount Moura, and the tin reserves on the Bangka Island were declining and would soon be depleted.

Herman said that the decline in the exploration spending was partly due to difficulties of the mining companies in raising fresh cash from the capital market, and partly due to domestic political jitters.

But he said that the country's mining sector offered huge profit potential, pointing out that over the past three years, investment in Indonesia's mining sector resulted in a profit of between 11-15 percent, compared to only 1.8-3.8 percent in Australia. (*)