Indonesia, Southeast Asia’s largest economy, will limit foreign companies from owning more than 49 percent of some mines, potentially limiting investment in the world’s largest thermal-coal and tin exporter.
The government will require foreign holders of mining business licenses to reduce their stake to 49 percent within 10 years of starting production, according to a decree signed by President Susilo Bambang Yudhoyono on Feb. 21, down from the 80 percent threshold in a 2010 decree.
Mines operating under so- called Contracts of Work, such as Freeport McMoRan Copper & Gold Inc.’s and Newmont (NEM) Mining Corp.’s operations will need to change to mining business licenses when the contracts expire, the decree said.
Indonesia is seeking a greater participation from local investors in a bid to boost the domestic mining industries, according to the decree. The move may deter overseas investment in the country that’s also rich in nickel, copper and bauxite, the nation’s mining associating said.
“Mining is a long term and capital intensive investment,” said Syahrir Abubakar, the executive director of the Indonesia Mining Association, whose members including the local units of Freeport (FCX) and Newmont.
“If they have to divest within 10 years, they are not yet reaching break event point of their investment.”
The foreign companies will need to sell shares to the central government, regional governments, state-owned companies or local private companies, according to the decree, which is posted on the website of the directorate general of coal and minerals. It applies to both coal and minerals mining.
bloomberg.com
The government will require foreign holders of mining business licenses to reduce their stake to 49 percent within 10 years of starting production, according to a decree signed by President Susilo Bambang Yudhoyono on Feb. 21, down from the 80 percent threshold in a 2010 decree.
Mines operating under so- called Contracts of Work, such as Freeport McMoRan Copper & Gold Inc.’s and Newmont (NEM) Mining Corp.’s operations will need to change to mining business licenses when the contracts expire, the decree said.
Indonesia is seeking a greater participation from local investors in a bid to boost the domestic mining industries, according to the decree. The move may deter overseas investment in the country that’s also rich in nickel, copper and bauxite, the nation’s mining associating said.
“Mining is a long term and capital intensive investment,” said Syahrir Abubakar, the executive director of the Indonesia Mining Association, whose members including the local units of Freeport (FCX) and Newmont.
“If they have to divest within 10 years, they are not yet reaching break event point of their investment.”
The foreign companies will need to sell shares to the central government, regional governments, state-owned companies or local private companies, according to the decree, which is posted on the website of the directorate general of coal and minerals. It applies to both coal and minerals mining.
bloomberg.com
No comments:
Post a Comment