Minerals exploration difficulties will hold back Indonesia’s economy, a new mining group has warned. “Indonesia is facing a future drop in export earnings from minerals and increased costs from importing industrial minerals if its exploration sector remains in difficulty,” Malcolm Baillie said in a recent statement. Mr Baillie is chairman of the Forum for Exploration and Mining Development Indonesia / Forum Explorasi Pertambangan Indonesia (FEMDI / FEPI), a new mining sector organisation of explorers, medium-size producers and service companies.Increased demand for mineral products, particularly from China and India, has resulted in soaring metal prices and placed pressure on existing mining operations to meet the demand. The inevitable result of this is the depletion of known reserves and not enough major new mines are being discovered.
“Indonesia is ranked as one of the countries with the highest potential for new mineral discoveries, and has attracted its fair share of investors. Interest was heightened last year with the introduction of the new Mining Law and some of the implementing regulations. However, the initial enthusiasm of these investors is wavering due to the complex and lengthy administrative procedures which also encourage unacceptable practices,” he stated.

FEMDI-FEPI was founded as a result of these frustrations and concerns. The statement continues: “It is our positive desire to assist the Government of Indonesia to clarify and streamline the procedures needed to encourage more risk capital to the sector. New discoveries of hard-to-find minerals are critical for Indonesia’s economic growth and the well-being of its people. While exploration investment in Indonesia has only averaged $20 million a year over the past decade, in just one year, 2008, $470 million was spent in Brazil and $3.3 billion in Canada. Studies show that spending of at least $500 million annually is needed just to sustain Indonesia’s current production levels.” Mr Baillie concluded: “We call on all stakeholders, including the companies involved, the associations representing them and the Government of Indonesia, to address this worsening situation with a sense of urgency.”