Govt obliges foreign miners to divest majority stake to local
Thursday, March 1 2012 - 05:55 AM WIB
Ministry of Energy and Mineral Resources said on Thursday that the government has passed Government Regulation (GR) Number 24/2012 to replace GR 23/2010 which regulates mining industry.
Director General of Mineral and Coal of the Ministry of Energy and Mineral Resources, Thamrin Sihite, told reporters that under the new regulation, foreign-owned mines will be obliged to gradually divest up to 51 percent stakes to Indonesian companies after 10 years of commercial operations. Under the old regulation, foreign-owned mines were only obliged to divest 20 percent shares to Indonesian companies. Thamrin said that all types of licenses related to the divestment process will fall under the authority of the Ministry of Energy and Mineral Resources (MEMR).
The new GR also regulates that the extension of coal contract of works (CCoW) and contract of works (CoW) will be decided by the MEMR and not the local governments. Thamrin said that after the extension, the status of the contract holders will automatically be changed into special mining license, popularly known as IUPK. Under the contract with the government, CCoW and CoW holders can ask for 2x10 years extension when their initial contracts expire.