MEMR plans new mandatory mining divestment policy

The Ministry of Energy and Mineral Resources is finalizing a new mandatory divestment scheme for foreign mining companies operating in the country, Bisnis Indonesia reported on Tuesday.

The paper quoted Director General of Mineral and Coal Bambang Gatot Ariyono as saying that the minister is expected to soon issue a new regulation that would make the size of the stake to be divested by the foreign firms to national investors to vary depending on the mine life and type of commodity.

Under the current Government Regulation No 77/2014, mining companies are obliged to divest up to 51 percent stake to national investors. But mining firms with integrated operation including smelter such as IDX-listed PT Vale Indonesia Tbk are allowed to divest only 40 percent stake, while those with underground mining operation such as PT Freeport Indonesia are obliged to only divest up to 30 percent stake.

Freeport is obliged to divest another 10.64 percent stake to national investors next month. According to the regulation, Freeport must first offer the stake to the central government through state-owned enterprise, followed by the local government, and national private companies.

Meanwhile, Kontan quoted Minister of Energy and Mineral Resources as saying that the government is looking into possibility for PT Freeport to offer the stake via the stock market in case SOE or the local government declines to take up the offer. (*)