Anggi M. Lubis, Jakarta – Publicly listed miner Merdeka Copper Gold says that its subsidiary Bumi Suksesindo (BSI) will temporarily halt construction at its East Java site – said to contain the second-largest supply of ore resources in the country – following a riot that ended in arson and shooting last week.
Despite the disruption, Merdeka – part of investment company Saratoga Group – emphasized that initial production from the concession would be on schedule, and that the incident would not affect a syndicated loan the miner plans to sign in January by putting up its whole stake in BSI as collateral, an executive has said.
BSI president director Cahyono Seto said that his company would halt physical activity at Tujuh Bukit mine in Banyuwangi and would only carry out administrative activities, at least until after local elections on Dec. 9.
The measure, he said, was intended to calm tensions at the site, adding that BSI would enhance security at the concession in cooperation with local police.
Seto said that his company would educate local people that the company's operations were legal and environmentally safe. "We are still figuring out what is behind the riot and such strong opposition," he told reporters in Jakarta on Monday.
The riot, according to media reports, broke out after a meeting held between BSI, the local administration and local residents on Wednesday evening, lasting until early Thursday, with people demanding the company close the mine.
Enraged locals burnt facilities and equipment at the site, and though no fatalities were reported, at least three people suffered injuries as police officers opened fire, claiming to be outnumbered by protesters. Two people had been named suspects, media reported.
Merdeka Copper Gold president director Adriansyah Sjoekri insisted that his company had obtained the necessary permits from the Banyuwangi administration in 2012, including an environmental impact assessment (AMDAL).
Adriansyah added that 80 to 90 percent of BSI employees were locals, and that last week's uprising had no precedents.
Merdeka corporate secretary Ellie Turjandi said that her company was currently reviewing possible losses from the riot, adding that all equipment was insured.
According to Ellie, despite the disruption, initial production from the site was expected to start in the fourth quarter of next year as previously planned. "The construction is still at an early stage, as we are still building infrastructure, such as roads," she explained.
According to a 2012 Joint Ore Reserves Committee (JORC) report, Tujuh Bukit has 90 million tons of ore in its oxide layer. The company expects to generate 90,000 troy ounces of gold and 300,000 oz of silver annually up to 2025 once production begins.
The riot, the company insisted, would not impact a plan to secure a syndicated loan amounting to US$120 million from five foreign banks in January to help finance construction at the site expected to reach $126.5 million.
Source: http://www.thejakartapost.com/news/2015/12/01/construction-gold-mine-halted-after-locals-rise.html