Government denies policy changes in mining contract
Government denies policy changes in mining contract
JAKARTA (JP): State Secretary/Minister Moerdiono denied
yesterday that new foreign mining contractors would have to give
the government a 10 percent share of their ventures on a free
carried-interest basis.
"Wholly foreign-owned companies are still allowed to operate
in the mining sector," Moerdiono said about reports that the
government was planning sweeping changes to its policies on
foreign mining.
He said that if the government had enough money it would
develop the country's mining resources itself instead of allowing
foreign investors or contractors to do so.
"Mining ventures are capital intensive and highly risky," he
said.
"Who said it was now compulsory?" Moerdiono asked reporters
who were asking him about reports that the Ministry of Mines and
Energy had asked foreign companies applying for seventh
generation mining contracts to allocate at least 10 percent of
their shares to the government.
Moerdiono said foreign investment was still badly needed to
tap Indonesia's mineral resources because the government had very
limited resources to do it.
He said the government would not invest its own funds in the
risky mining sector.
Foreign companies applying for seventh generation mining
contracts were reportedly briefed about new changes to their
contracts early this week and yesterday by mining officials.
The proposed seventh generation mining contract changes have
not been discussed with the House of Representatives, but would
require contractors:
* To offer shares to local cooperatives or a company owned by
the local administration.
* To increase the government's share proportionally if it
discovers additional mineral reserves or increases its annual
production above the already approved level.
* If shareholders of the company or its holding company make
capital gains as a consequence of publishing information owned by
the company on a stock market outside Indonesia, then the capital
gains will be allocated to the shareholders in proportion to
their equity.
* If the company wants to get additional capital from a public
offering, the float must be on the Indonesian stock market. A
public offering of the company may be made outside Indonesia.
* No data may be made public without the government's consent.
All data must be checked by a third party appointed by the
company with government approval.
* The contractor's reserves calculation/estimation must be
made by an independent consultant appointed by the government but
paid for by the company.
Industry sources said that if the government stood firm on the
new guidelines, there could be a mass exodus of foreign mining
investors.
The government recently demanded 10 percent of two major gold
projects, the Busang gold mine in East Kalimantan which turned
out to be worthless, and in the Newmont gold mine project on
Sumbawa island, West Nusa Tenggara.
U.S. Newmont refused the demand. (rid)