Brad Gordon, CEO of Brisbane-based Intrepid Mines (ASX:IAU), has stated publicly that Indonesia is doing damage to its reputation as a foreign investment destination following the recent legal difficulties experienced by his own company and Churchill Mining.
In an interview with ABC Radio Australia, Gordon says investors throughout North America and Australia are becoming far more concerned about the sovereign risk of their Indonesian investments:
What we’ve seen recently is events like this, where you’d have to question the sovereign risk, even for large projects like Tujuh Bukit. I’m not sure whether that is a message that will get through in Indonesia, but it’s certainly something that I’m hearing now, from our investors and from the markets in north America and Australia. This is another incident which doesn’t bode well for foreign investment in Indonesia.
Intrepid Mines was ousted from its Tujuh Bukit copper, gold and silver project in dramatic fashion earlier this week by representatives of its Indonesian joint-venture partner who paid an unexpected visit via helicopter.
The Australian company has invested nearly AUD100 million in the Eastern Javanese mining project since 2007, yet this princely sum may prove irretrievable if Indonesian courts rule that the seizure of the project by joint venture partner PT Indo Multi Niaga is legitimate.
Intrepid’s removal occurred almost immediately following the transfer of ownership in PT Indo Multi Naga to mysterious new shareholders whose precise identity has yet to be properly ascertained.
In spite of the onset of these unexpected challenges, Gordon is putting on a brave face, saying that the company has met all of its obligations under its original agreement with local partners, and remains optimistic that the problem can be resolved.
