INDONESIA is to take more of the profits from its vast mineral resources by limiting foreign ownership of mines in a move likely to scare off new investment in the world’s top exporter of thermal coal and tin.
Under new rules announced on the energy ministry’s website, Indonesia will force foreign firms to sell down stakes in mines by the 10th year of production and increase domestic ownership to at least 51 per cent.
Southeast Asia’s largest economy contains some of the world’s richest mineral deposits and its fast-growing mining sector accounts for more than a tenth of GDP. Grasberg on eastern Papua island is the world’s largest gold mine. It was not made clear if the regulation, effective from 21 February, will apply only to new investors or also to existing mining investors such as Freeport McMoRan Copper & Gold and Newmont. “Holders of mining business permits and special mining business permits, in terms of foreign investment, are required to divest the shares gradually five years after production,” the regulation said. Bumi, which operates under the previous licensing system will be required to shift to the new licenses when the contracts expire, Liberum Capital said.