FOREIGN MINERS ONLY REQUIRED TO DIVEST 20 PERCENT

Jakarta, March 1 (ANTARA) - Foreign mining companies are only required to divest an additional 20 percent stake to Indonesian parties, a statement said.

The provision is made in Government Regulation
Number 23/2010 on the implementation of Business Activities on mineral and coal mining a copy of which was obtained here on Monday.

The Government Regulation issued on February 1, 2010 is a mandate of law no.4/2009 about minerals and coal mining.

Article 97 of the government regulation mentioned that foreign capital as the mining permit holders (IUP) and a special mining license (IUPK) after five years of production must divest its shares, where at least 20 per cent of its share is owned by the Indonesian participants.

The Indonesian participants consisting of the central government, provincial government or the district/city, state, regional enterprises, and the national private.

The scale of divestment is different from the previous divestment provisions.

The previous divestment regulation was stipulated in the work contract governing cooperation between the government and the mining contractor.

For example, in the work contract between the government and PT Newmont Nusa Tenggara (NNT), foreign shareholders must divest an additional up to 51 percent after five years of production.

Article 97 of the government regulation No. 23/2010 also mentioned, if the government is not willing to buy divestment share, it is offered to the provincial or district/city administration.

However, if the provincial or district/city is not interested in, then it is offered to the state-owned and regional enterprises which is carried out through auction.

If the divestment is not achieved, then the stock offering is conducted next year.

Further provisions on procedures for divestment of shares and stock pricing mechanism is regulated by ministerial regulation after making coordination with relevant agencies.