* Comments seem to contradict mining minister's statement
* Investors have complained about policy uncertainty
* Changing the rules would be difficult - S&P
By Neil Chatterjee and Yayat Supriatna
JAKARTA, Nov 28 Indonesia is considering whether
to extend a divestment deadline for foreign mining companies
beyond 10 years but no decision has been made, Chief Economic
Minister Hatta Rajasa said on Wednesday.
The government of Southeast Asia's largest economy has
issued a series of mining rules this year in a bid to reap more
profit and promote domestic industry but investors have
complained about policy uncertainty and the latest comments
appeared to contradict a statement by another minister.
Energy and Mineral Resources Minister Jero Wacik said the
government had already decided to extend the deadline under
which companies must sell down stakes in mines and increase
domestic ownership, making conditions more favourable for
Rajasa coordinates economic policy in President Susilo
Bambang Yudhoyono's government.
Companies must sell down stakes in mines and increase
domestic ownership to at least 51 percent by the 10th year of a
The divestment rule announced in March is part of a global
trend for mineral producing countries to push for more cash and
Indonesia is a leader in nickel ore, thermal coal and
refined tin exports, while bauxite exports have spiked. Overall,
the mineral sector including coal is worth $93 billion and
contributes 12 percent to Indonesia's gross domestic product.
The country is favoured by emerging market investors and
recently regained investment grade status.
"There's an idea to extend the divestment period beyond 10
years but no decision has been made yet. The settlement of
contract renegotiation remains a priority," Rajasa told
He was referring to talks between the government and some of
the most prominent mining companies operating in Indonesia
including Freeport-McMoRan Copper & Gold, Newmont Mining
Corp and PT Vale Indonesia Tbk.
Local partners would benefit from the March divestment rules
but they will hurt investment by hitting miners who had already
spent potentially hundreds of millions of dollars on
exploration, according to foreign miners.
"We are going to prolong the (divestment) period," Wacik
said. He gave no further details.
The government's investment chief Chatib Basri told Reuters
he had suggested to the mining ministry that it consider
extending the divestment period to 25-30 years and carrying out
a study to determine the best timeframe.
It would be hard to change the divestment rules because of
their significance in terms of government policy, Standard &
Poor's Asia Pacific corporate ratings associate director Xavier
"The divestment regulation is probably the highest profile
regulation in the sector and the one that strikes most chords in
the Indonesian electorate because it pertains to ownership of
the nation's resources," he said.
"These conflicting messages (from government officials) have
blurred the picture further for potential domestic and foreign
investors," he told Reuters.