Eight foreign mining firms due for divestment this year
JAKARTA (JP): Eight foreign mining firms must divest shares this year as part of their contractual obligation to relinquish ownership to local investors.
Minister of Energy and Mineral Resources Purnomo Yusgiantoro said on Tuesday the three gold mining companies and five coal mining companies must sell their shares either to the government, locally owned companies or Indonesian citizens.
The gold mining firms are PT Kelian Equatorial Mining (KEM) in East Kalimantan, PT Newmont Minahasa Raya in North Sulawesi and PT Indo Muro Kencana (IMK) in Central Kalimantan.
"As of today, the share offerings from KEM and IMK have not yet resulted in any transactions because of the economic crisis and depleted gold reserves.
"They will end their operations within a few years," Purnomo told legislators during a hearing with House of Representatives Commission VIII for energy and mining affairs.
Purnomo said another reason local investors were hesitant to respond to the share offerings was the uncurbed illegal mining taking place in these companies' areas of operations.
According to their contracts, all foreign mining firms have to divest up to 51 percent of their shares after a certain period of production.
The director general for geology and mineral resources at the ministry of energy and mineral resources, Wimpy S. Tjetjep, said KEM's owner, Anglo-Australian mining giant Rio Tinto, must divest 44 percent of its shares to local investors.
Wimpy said that Newmont Minahasa, which is 20 percent owned by local firm PT Tanjung Sarapung, with the other 80 percent held by the Denver-based Newmont Mining Corp., must divest 15 percent of its shares this year.
As for IMK, he said, the gold and silver mining company must divest 23 percent of its shares this year.
Indo Muro is 10 percent owned by local firm PT Gunung Muro Persada, with the rest held by Australia's Aurora Gold Ltd.
According to Wimpy, it is unlikely investors will be interested in purchasing shares of the three gold companies because their operations will end soon.
The five foreign coal mining firms which have to divest their shares this year are PT Arutmin Indonesia, PT Adaro Indonesia, PT BHP Kendilo Coal Indonesia, PT Kaltim Prima Coal (KPC) and PT Kideco Jaya Agung, all of which are located in Kalimantan.
Wimpy said Arutmin was slated to divest 31 percent of its shares, Adaro 4 percent, BHP 30 percent and KPC 51 percent. He did not say how much Kideco must divest this year.
He said the government already owned a 40 percent stake in Adaro, so the firm only had to divest 4 percent this year and another 7 percent in 2002.
Australia's New Hope Corporation Ltd. owns 50 percent of Adaro, with the remaining 10 percent held by the United States- based Mission Energy.
Asked whether the government planned to sell its stake in Adaro, he said the decision was the province of the finance ministry. However, he added that he was not aware of any plans by the government to sell its stake in the profitable Adaro.
Commenting on the divestment of the U.S.-based gold and copper mining firm PT Freeport Indonesia, he said the government was looking into it.
Unlike other mining companies, Freeport has avoided divesting shares to local investors.
Although Freeport's contract does not exempt it from divestment, the company made use of government regulation No. 20/1994, which allows for 100 percent foreign ownership in the mining industry.
Freeport is 81.28 percent owned by U.S. mining company Freeport McMoRan Copper & Gold. The Indonesian government holds a 9.36 percent stake in the company, as does PT Indocopper Investama Corporation.
The latter is jointly owned by Freeport and Nusamba Mineral Industries, a company linked to former president Soeharto.
"Freeport's issue should have been resolved last year, but apparently no one attended to it so it's all up to us now," Wimpy said. (bkm)