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Indonesia govt told to pave the way to iron reserves in Kulon Progo

Source: 25-OCT-2011 Intellasia | Jakarta Post
25 Oct, 2011 - 7:00:00 AM

The government's infrastructure expansion drive in Java should include building access to a planned iron ore mine in Kulon Progo regency, as the country badly needs to increase its iron production, an official says.

"The government should build well integrated infrastructure in the regency, including a seaport, airport, access roads and electricity," Mudrajad Kuncoro, an expert staff for economic affairs under the Yogyakarta Governor, said at the Industry Ministry on Friday.

Infrastructure expansion in Java is a part of the Master Plan for the Acceleration and Expansion of Indonesian Economic Growth, known as MP3EI, launched by President Susilo Bambang Yudhoyono in May.

The ambitious Rp 4,000 trillion (US$451 billion) economic master plan, which runs from 2011 to 2025, involves infrastructure projects in six economic corridors: Sumatra, Kalimantan, Java, Nusa Tenggara - Bali, Sulawesi and Maluku - Papua.

Data from the Industry Ministry showed that the government was focusing its projects in Java mainly along the northern coastal highway (Pantura), linking international seaports Tanjung Priok in Jakarta and Tanjung Perak in Surabaya.

The projects also involves a link to Yogyakarta.

Mudrajad said that at present, a deeper infrastructure link to Kulon Progo regency, located 55 kilometers south of the provincial capital of Yogyakarta, was needed to allow PT Jogja Magasa Iron to begin an iron works project in the area. The project would be a joint venture between Australia's Indo Mines Limited (IML) and Indonesia's PT Jogja Magasa Mining (JMM).

"Infrastructures and 120,000 megawatts of electricity are essential to help the company's operations, which will start running in 2014 by the latest," he said.

Mudrajad said that IML owned a 70 percent stake in the $1 billion project, while JMM owned a 30 percent stake. The construction phase of the project would begin in November this year and last for about three years.

Currently, the company is still waiting for the results of a feasibility study conducted by the Energy and Mineral Resources Ministry and the required environmental impact assessment (Amdal), which would be issued by the Kulon Progo regency administration.

Mudrajad said that the project spanned 3,000 hectares of land across eight villages.

He said the company would mine between 9 million and 15 million tonnes of iron ore a year and produce 2 million tonnes of concentrate and 1 million tonnes of pig iron per year.

Indonesia's current annual iron ore production capacity is 5 million tonnes. Domestic demand is expected to reach more than 10 million tonnes in 2013.

Industry minister M.S. Hidayat said that building access to Kulon Progo was essential because the iron industry would create multiplier effects on the economy.

"In the next two years, we will build an airport," Hidayat said.

Data from the National Planning Agency (Bappenas) showed a plan to build the Kulon Progo International Airport at an estimated cost of $500 million.

Bappenas transportation director Bambang Prihartono said that the agency would synergise infrastructure projects in Yogyakarta.

http://www.thejakartapost.com/news/2011/10/22/govt-told-pave-way-iron-reserves-kulon-progo.html