Indonesia to limit foreign ownership in mines

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 immediately clear if the regulation, effective from Feb.21, will apply only to new investors or also to existing mining investors such as Freeport McMoRan Copper & Gold Inc and Newmont Corporation. “Holders of mining business permits and special mining business permits, in terms of foreign investment, are required to divest the shares gradually 5 years after production, so in the 10th year the shares are at least 51 per cent owned by Indonesian entities,” the regulation stated.