Bureau of Mines / Minerals yearbook: Area reports: international 1971
Year 1971, Volume 3 (1971)
Indonesia, pp. 393-403 ff. PDF (1.2 MB)
~93The Mineral Industry of Indonesia By Walter Pajalich1 Persistent efforts towards political stabilization and consolidation of social affairs in 1971 resulted in acceleration of economic activities. The economic reform program initiated by the Government in 1966 has been markedly successful in curbing the annual inflation rate from 650 to 9 percent. The strongest force behind the economy's growth was the rapid increase of fixed investments and development expenditures. Liberalization of national laws governing foreign investments, among which was the Foreign Capital Investment Law (Law No. I) and Mining Law (Law No. 11), paved the way for this growth. Under the new mining law, foreign companies may obtain exclusive rights to conduct mineral exploration and exploitation on the basis of a "Contract of Work" agreement with the Government. Foreign companies may also act as mining operators or contractors for State-owned mining enterprises. In the case of petroleum and natural gas, extraction may only be undertaken by a State enterprise. Consequently, all foreign participation in~ the oil and gas industry of Indonesia has to be based on a "production sharing" or "development" contract with the State oil enterprise Pertambangan Minjak Dan Gas Bumi Nasional (P. N. Pertamina). These contracts which call for a 65/35 profit split in favor of the Government have been generally used with all the international petroleum developers; P. N. Pertamina has reserved the inland areas for itself and contracted the offshore areas to foreign developers. The interests of foreign oil companies in Indonesia are immense and increasing. There are over 50 foreign companies with equity interests in the oil operations of the country. At least 35 companies were exploring for oil, 18 of which were United States companies. Significant legislation affecting the State enterprise, P. N. Pertamina, was scheduled to be implemented in January 1972. Government Regulation No; 72::and Presidential Decree No. 127-M stipulated that P. N. Pertamina will become Perussahaan Per. tambangan Minjak Dan G~s Bumi Negara (Pertamina). Under these new regulations the central government will exercise greater control over the operationn of this State enterprise. Foreign nonoil investments approved by the Government between January 1967 and December 1971 totaled 444k projects with capital commitments up t0 $1.6 billion. Some of the largest pro~écts deal with mineral exploration and development. So far about 180 companies have made applications for permits to look for minerals. At yearend, 14 foreign companies had signed agreements with the* Indonesian Government to develop and exploit minerals, and six others were in the process of negotiating contracts. The following foreign companies have agreements for mineral development: 1. Freeport Indonesia Inc. (subsidiary of Freeport Sulphur Co. U.S.A.). 2. N. V. Billiton Maatschappij (The Netherlands). 3. P. T. International Nickel Indonesia (subsidiary of International Nickel Company of Canada:Ltd. (Inco)). 4. P. T. Pacific.. Nickel Indonesia (Consortium of United States Steel Corp., U.S.A., Koninklijke Nederlandsche Hoogovens en Staalfabrieken, N. V., William H. Muller & Co., N. V., the Netherlands; Newmont Mining Corp., U.S.A.; Sherritt Gordon Mines, Ltd., Canada). 5. Aluminum Company of America (Alcoa, U.S.A.). &. Indonesian Nickel Development Co., Ltd~ (consortium of Fuji Iron and Steel Co., Ltd.; Mitsubishi Shoji Kaisha, Ltd.; Mitsui & Co. Ltd.; Nippon Mining Co. Ltd.; Nippon Yakin Kogyo Co. Ltd.; Pacific 1 Mining engineer, Division of Nonmetallic Minerals.
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