Indonesia to Renew Mine Contract Extensions Earlier than Two Years
In a surprise move, Indonesia will begin allowing mining companies to renew mine contracts earlier than two years before expiration, a move that greatly favors US-based Freeport-McMoRan Copper & Gold Inc.
According to the mines minister, new regulations on contract extensions would be linked to a mining company’s smelter plans. Southeast Asia’s largest economy also indicated that it could ease a planned 2017 export ban on copper and other mineral concentrates.
"The government regulation for extension proposals that regulates a minimum of two years before a contract expires will be revised," Sudirman Said, Indonesia's energy and mineral resources minister.
Under the country’s current rule, miners operating in Indonesia can only apply for a contract extension two years before the agreement is due to end.
Freeport currently operates the Grasberg mine, the world’s largest gold mine and world’s second-largest copper mine when at full production. The company has for years been seeking contract certainty before investing more than $15 billion after 2016.
The firm’s current deal is set to expire in 2021 but a government decision on an extension would be reached before July 25 of this year. Government officials previously stated Freeport could only renew its 2021 deal in 2019 at the earliest.
The government’s willingness to work with mining companies comes only after Freeport-McMoRan moved ahead with expansion plans at its copper smelter at Gresik and gave its support to a government-backed industrial zone in Papua.
Last year, Freeport and Indonesia agreed on a Memorandum of Understanding (MoU) with the Indonesian government over its contract renegotiations.
Zimbabwe targets £8.8bn mining industry by 2023
Zimbabwe’s government plans to fast-track exploration, evaluation and digitalisation of selected reserved mining areas under the Ministry of Mines and Mining Development as part of wider measures to achieve a £8.8 billion mining industry by 2023, according to a senior government minister.
Information Minister Monica Mutsvangwa said other plans include stopping the issuance of special grants in the reserved areas under the Ministry of Mines and Mining Development until the exploration and evaluation is complete and a robust value addition program for diamonds is implemented.
Mutsvangwa was speaking at a post-cabinet media briefing on December 15.
She adds that the issuance and renewal of special grants for energy should also be based on the financial and technical capacity to value add all types of coal, as well as for ideal exploration of Coal Bed Methane.
For renewal of special grants, consideration should take into account the period the Special Grant has been held as well as plans with milestones for value addition of the special grant, Mutsvangwa says. She adds that the Zimbabwean government expects gold to drive the mining sector in order to achieve the ambitious target, with the precious metal expected to contribute approximately £2.96 billion to the overall target.
Mining is one of Zimbabwe’s major contributors to its economy, alongside agriculture, which is the mainstay. The mining sector accounted for more than 60 percent of the country’s foreign currency receipts in 2019, and contributed around 16 percent to national Gross Domestic Product, the Chamber of Mines says.
The country’s mining industry is focused on a diverse range of small to medium mining operations. The most important minerals produced in Zimbabwe include gold, asbestos, chromite, coal and base metals.
Zimbabwe expects its economy to expand by 7.4 percent in 2021 from a projected contraction of 4.5 percent this year, due to the effects of drought and the COVID-19 global pandemic.
When presenting the 2021 National Budget in November this year, Finance and Economic Development Minister, Professor Mthuli Ncube, said that the mining sector is projected to rebound by 11 percent next year after surviving a COVID-19 induced shock that saw the sector contract by 4.7 percent in 2020. In September, mining bans in national parks were introduced, according to news agencies.
He added that the National Budget would allocate £1 billion towards the operations of the ministry for planning, promotion and exploration, data capturing, and automation, among other key mining processes.
Other factors necessary for the achievement of the £8.8 billion target include a stable macroeconomic environment, policy consistency, and availability of long-term capital to fund mining projects along the entire mineral value chain, the minister said.
Stopping "illicit financial flows" from gold smuggling is another key issue to address, according to media reports.