RE: RE: RE: Resource nationalism More from MD, on Indonesia again this time:
https://www.metalbulletin.com/Article/2991705/Base-metals/RESOURCE-NATIONALISM-Indonesia-will-cap-foreign-ownership-in-mines-at-49.html
Resource nationalism: Indonesia will cap foreign ownership in mines at 49%
Mar. 8, 2012
Indonesia will cap foreign ownership of mining projects at 49% by the tenth year of production as it seeks to bring the country’s natural resources under state control, a senior government official said.
Foreign investors that hold 100% ownership of mines will be forced to sell 20% to Indonesian investors by the sixth year of production. At least 30% of the mine must be sold by the seventh year; 37% by the eighth year; 44% by the ninth year; and 51% in the tenth year of production, according to the ministry of energy and mineral resources.
“Indonesia is seeking to emulate China. It wants to bring its natural resources under state [control],” a senior official at the ministry said.
The new regulation is applicable only to foreign companies that hold mining permits. It does not apply to those companies that have permanent mining contracts, such as the local units of Freeport MacMoran, Newmont Mining and Vale.
One big name that may be affected is Rio Tinto, which is conducting a feasibility study on exploring for nickel in Central Sulawesi.
A spokesman for Rio Tinto was not immediately available for comment at the time of writing.
Investment ‘doesn’t make sense’
The mining permit system has been enforced in Indonesia since the new mining law was passed in 2009 to replace the 1967 mining laws. Indonesia has issued more than 10,000 mining permits since 2009, and around 10% of those are 100%-foreign-owned, sources said.
“If the government enforces this to Rio Tinto, this may scare off other mining investors,” Syahrir Abubakar, executive director of the Indonesian Mining Assn (IMA), told Metal Bulletin.
Many foreign companies, a number of which are nickel producers from China, have complained to the IMA about the new regulation, Abubakar said.
“Mining takes more than ten years to break even,” he pointed out.
“If divestment is enforced from the fifth year onwards and by the tenth year you are no longer a majority owner of your project, it just doesn’t make sense to invest in Indonesia,” Abubakar said.
“Perhaps foreign companies that initially wanted to invest in Indonesia will look to Vietnam or other countries that have more lenient rules,” he added.
The limit to foreign ownership is the latest move by Indonesia towards resource nationalisation.
It said last month it will ban exports of unprocessed ore from 2014 for mining contract holders, and possibly from May 6 this year for mining permit holders.
The government will also renegotiate the mining contracts of both PT Freeport Indonesia and Newmont Nusa Tenggara, with insiders speculating that they may be asked to pay higher royalties or to divest stakes in their company to the government.