Government to set price scheme for mining divestment obligation

The Ministry of Energy and Mineral Resources will revise Minister Regulation No 27/2013 to accommodate the price scheme for shares to be divested by foreign mining companies to the government or other Indonesian investors, Bisnis Indonesia daily reported on Tuesday.

The paper quoted Director General of Minerals and Coal at the ministry, R. Sukhyar as saying that the revision of the regulation was expected to be completed this year.

Sukhyar said that under the planned policy, the price of shares to be offered to the government will not be based on the prevailing market price, but based on proper price. He argued that the government, which represents the state as the owner of the mining reserves, is entitled to price different to that in the market, but still within proper corridor.

Foreign mining companies operating in the country such as PT Freeport Indonesia and PT Vale Indonesia Tbk are obliged to divest their stake to Indonesian investors as required by the law. They must first offer the shares to the government. If the latter declines to buy the shares, it can then be offered to private investors. (*)