Explorer exploits Suharto link after law changes
Western Mining Network has enlisted the help of Panji Adhikumoro Suharto, saying it is essential to have a well-connected Indonesian partner to help navigate the country's shifting and complex regulatory and business environments.
When asked about his contribution to the company, Mr Suharto said: "I know a lot of people in Indonesia and I can get a lot of information from the Indonesia side."
Executive chairman of Western Mining Chris Clower said that "having a right partner is important, so that when you do create something of value, it doesn't get taken away from you".
"It is not about the black market, it is about making sure that we are not vulnerable."
The south-east Asian country last year introduced a spate of mining laws which limit foreign ownership of resource assets and banned the export of 14 unprocessed metal ores including nickel, bauxite, manganese and iron.
Following the introduction of the new foreign ownership law, the Australian ambassador to Indonesia, Greg Moriarty, used a speech in May last year to warn publicly of the rising tide of economic nationalism in Indonesia, especially for Australian exporters and investors in the country.
Mr Clower said Mr Suharto's intelligence-gathering skills were crucial in the murky world of Indonesian business, with its constantly changing goal posts.
He said it was important to "understand where wriggle room is within the regulations" and "to get a sense where the law is going to go".
He highlighted the pitfalls of not having the right partner and mentioned the woes of British resources company Churchill Mining, which is involved in a protracted legal battle with Indonesian authorities after it lost a $1.8 billion coal tenement in Indonesian Borneo (Kalimantan).
Similarly, Brisbane-based Intrepid Mines was also elbowed out of its project in Indonesia by its local business partner and its share price hammered when its workers at the Tujuh Bukit mine site were told to leave.
Gregory Sarkissian, managing director of Borneo Brothers, the largest shareholder in Western Mining, said such pitfalls could be avoided, saying the Suharto name still carried a lot of weight in Indonesia.
"When I go to places, when people know that Panji's family is involved, they don't want to make any trouble and go out of their way to help."
However, Professor Tim Lindsey, an Indonesian law expert at the University of Melbourne, said the Suharto name carries very little political currency in modern Indonesia.
"The Suharto name does not glitter in Indonesia. Remember that when Suharto died he was facing corruption charges," he said.
Frequently Asked Questions about this Article…
Western Mining Network is a small ASX-listed mining exploration company. It has enlisted Panji Adhikumoro Suharto to help navigate Indonesia's shifting and complex regulatory and business environment, with the company saying a well-connected Indonesian partner is essential for operating there.
Panji Suharto is a grandson of former Indonesian strongman Suharto who has been promoting the company to Australian retail investors. He says he knows many people in Indonesia and can gather information there, and Western Mining's management says his contacts and intelligence-gathering skills are important for dealing with local complexities.
Last year Indonesia introduced mining laws that limit foreign ownership of resource assets and banned the export of 14 unprocessed metal ores, including nickel, bauxite, manganese and iron. These changes increase regulatory risk for foreign explorers and miners.
The foreign ownership limits can reduce direct control and returns for overseas investors and make local partnerships essential. The article notes that Australia’s ambassador warned of rising economic nationalism, underlining that foreign investors may face tougher constraints and must plan for regulatory changes.
The article cites Churchill Mining, which lost a US$1.8 billion coal tenement in Borneo and is in a protracted legal battle, and Brisbane-based Intrepid Mines, which was elbowed out of its Tujuh Bukit project and saw its share price hammered. These cases show how foreign firms can be disadvantaged without strong local support.
Opinions differ. Some shareholders say the Suharto name still carries weight and helps avoid trouble, but an Indonesian law expert quoted in the article says the Suharto name carries very little political currency in modern Indonesia and noted Suharto was facing corruption charges when he died, so the name is not a guarantee.
Executive chairman Chris Clower says having the right partner is important so created value isn't taken away and to avoid vulnerability. He highlights Panji's role in gathering intelligence to understand where 'wriggle room' is in regulations and to sense where the law might be heading.
Investors should consider regulatory risk from foreign ownership limits and export bans, the quality and credibility of local partners, past examples of foreign firms losing projects, and management statements about how they will manage Indonesian legal and business complexities. Local connections can help, but they do not remove the underlying regulatory risks.
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