Tuesday, 15 September 2015


The association of Indonesia Emitents (AEI) rate that that span of 5 years for mining companies from start at the stockmarket (BEI) until making profit was too short. AEI and BEI were making a proposal to OJK. “Mining business is highly capital intensive, technology intensive and high risk for the long run so it is difficult to guarantee that Mining Permit can yield profit in 5 years,” Herman Kasih, member of AEI Evaluation Team told Business News (16/6).

Besides there were other requirements for holders of IUP Permit before they could play at the stock hall. The company must have an Indonesian Mineral Reserve Committee code while the cost for forwarding KCMI code was quite expensive, around USD 50 thousand (Rp.650 million). Considering the sizable cost, AEI proposed to set up a Venture Capital Body, so there would be enough time for IUP exploration permit to step up their performance whereby to enter BEI. “The Venture Capital could bridge IUM permit exploration holders and debitors. To ask for 8 to 10 years to tolerance, we must lobby OJK first.”

The prospect of mining corporations, in mineral or coal was promising including the prospect in the capital market. The number of mining companies listed at BEI was still limited. AEI Association, APBI and Aspindo recommended mining corporations – besides explorations also be active at the stockmarket.

Simultaneously, AEI would urge the authorities of the stockmarket including BEI to allow convenience. There had been requirement which was hard to meet by mining companies. The Capital Market Authority required a period of 5 years before a mining company made profit. “In 5 years the company is demanded to make profit and such is hard indeed.”

To cope with circumstances, AEI collaborated with APBI to establish a Capital venture body. A mining corporation before entering the stockmarket, must be armed with capital. “A venture capital could serve as bridge for mining companies. The required capital was not ignorable before entering the stockmarket. “We even plead the Government to permit foreign partner investors to hold majority shares, namely 49 percent, but they were not interested in minority shares. They rated Indonesia as not being investor friendly.”

Investors in various sectors including coal, gold and nickel were in the state of wait-and-see. They were attracted to Indonesia’s mineral resources but were walled out by regulations. The condition was different with foreign investors who had existed sooner in Indonesia like Freeport, Vale, Newmount etc. who could command over 80% - 90% of shares, the rest being given the Provincial Government. Under the new regulation, foreign investors could only command maximum 49% of share. BI and OJK had given the opportunity to holders of IUP Exploration permit. The Government of RI was trying to adopt the Joint Ore Reserves Committee (JORC) Australia. “The cost of JORC is extremely high, it could come to USD 200,000.- By BEI requirement, with just USD 50,000 a company could enter the stockmarket". (SS)

Business News - June 19, 2015

No comments: