Govt to give away some of its stake at mining firms to local people

The government plans to redistribute a portion of its stake at mining companies and an option to acquire stake at such firms to local people through local administrations and/or local traditional or tribal institutions.

State Minister of Transmigration and Population Al Hilal Hamdi told journalists in Jakarta on Tuesday that as a start, the government would give away some of its portion of ownership at gold and copper miner PT Freeport Indonesia in Irian Jaya to local people.

He said the government was currently conducting a simulation on a new profit sharing mechanism with PT Freeport Indonesia. When it goes well, the government will adopt such a mechanism with other mining companies across the country, in which the government has a stake or has an option to buy stakes.

"For that purpose, we will establish a legal entity especially tasked to handle this matter, and for its technical operation, we will issue a government regulation or a presidential decree," Al Hilal said.

He said the government's new policy to redistribute ownership at mining companies to local people serves as a recognition of the roles of local people in the development of local area, including in the mining sector.

The government normally holds an ownership at most mining companies or secured a right to acquire a stake at the mining companies, as stipulated in their contracts of works. In the contracts, mining companies are normally also required to divest their shares to local entities after certain period of their operation in the country.

During the Soeharto's administration, the government had put local people, or local administrations in the sidelines, when it comes to the exploitation of natural resources, including in the mining sector. (*)